ALPHA UCITS SICAV
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ALPHA UCITS SICAV A Luxembourg Undertaking for Collective Investments (Société d'Investissement à capital variable) RCS Luxembourg B 161924 PROSPECTUS JULY 2016
Transcript of ALPHA UCITS SICAV
ALPHA UCITS SICAV
A Luxembourg Undertaking for Collective Investments
(Société d'Investissement à capital variable)
RCS Luxembourg B 161924
PROSPECTUS
JULY 2016
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IMPORTANT INFORMATION
General
Shares in the Company are offered on the basis of the information and the representations contained
in the current Prospectus accompanied by the key investors information document(s) (the "KIID (s)"),
the latest annual report and semi-annual report, if published after the latest annual report, as well as
the documents mentioned herein which may be inspected by the public at the offices of the Company,
and the Administrative Agent.
In addition to the General Section, investors must refer to the relevant Special Section(s) attached at
the end of the Prospectus. Each Special Section sets out the specific objectives, policy and other
features of the relevant Sub-fund to which the Special Section relates as well as risk factors and other
information specific to the relevant Sub-fund.
No person has been authorised to issue any advertisement or to give any information, or to make any
representations in connection with the offering, placing, subscription, sale, conversion or redemption
of Shares other than those contained in this Prospectus and the KIID(s) and, if issued, given or made,
such advertisement, information or representations must not be relied upon as having been authorised
by the Company. Neither the delivery of this Prospectus or of the KIID(s) nor the offer, placement,
subscription or issue of any of the Shares will under any circumstances create any implication or
constitute a representation that the information given in this Prospectus and in the KIID(s) is correct
as of any time subsequent to the date hereof.
The members of the Board, whose names appear under the Section "General Information", accept joint
responsibility for the information and statements contained in this Prospectus and in the KIID(s) issued
for each Sub-fund or Class (as appropriate). They have taken all reasonable care to ensure that the
information contained in this Prospectus and in the KIID(s) is, to the best of their knowledge and
belief, true and accurate in all material respects and that there are no other material facts the omission
of which makes misleading any statement herein, whether of fact or opinion at the date indicated on
this Prospectus.
Investors may, subject to applicable law, invest in any Sub-fund offered by the Company. Investors
should choose the Sub-fund that best suits their specific risk and return expectations as well as their
diversification needs and are encouraged to seek independent advice in that regard. A separate pool of
assets will be maintained for each Sub-fund and will be invested in accordance with the Investment
Policy applicable to the relevant Sub-fund in seeking to achieve its Investment Objective. The Net
Asset Value and the performance of the Shares of the different Sub-funds and Classes thereof are
expected to differ. It should be remembered that the price of Shares and the income (if any) from them
may fall as well as rise and there is no guarantee or assurance that the stated Investment Objective of
a Sub-fund will be achieved.
An investment in the Company involves investment risks including those set out herein under Section
19 of the General Section. In addition, investors should refer to the Section "Specific Risk Factors" of
the Special Section of the relevant Sub-fund (if any) in order to assess – and inform themselves on –
the specific risks associated with an investment in such Sub-fund.
The Company is allowed to invest in financial derivative instruments. While the prudent use of
derivatives can be beneficial, derivatives also involve risks different from, and, in certain cases, greater
than, the risks presented by more traditional investments. A more detailed description of the risks
relating to the use of derivatives may be found under Section 19 of the General Section. The Special
Section relating to each Sub-fund will give more precise information on the types of derivatives, if
any, which may be used by a Sub-fund for investment purposes.
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All Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of, the
provisions of the Prospectus, the Special Sections and the Articles.
Definitions
Unless the context otherwise requires, or as otherwise provided in this Prospectus, capitalised words
and expressions will bear the respective meanings ascribed thereto under the Section "Definitions".
Selling Restrictions
The distribution of this Prospectus and the offering or purchase of Shares is restricted in certain
jurisdictions. This Prospectus and the KIID(s) do not constitute an offer of or invitation or solicitation
to subscribe for or acquire any Shares in any jurisdiction in which such offer or solicitation is not
permitted, authorised or would be unlawful. Persons receiving a copy of this Prospectus or of the
KIID(s) in any jurisdiction may not treat this Prospectus or KIID(s) as constituting an offer, invitation
or solicitation to them to subscribe for or acquire Shares notwithstanding that, in the relevant
jurisdiction, such an offer, invitation or solicitation could lawfully be made to them without
compliance with any registration or other legal requirement. It is the responsibility of any persons in
possession of this Prospectus or of the KIID(s) and any persons wishing to apply for or acquire Shares
to inform themselves of, and to observe, all applicable laws and regulations of any relevant
jurisdiction. Prospective applicants for or purchasers of Shares should inform themselves as to the
legal requirements of so applying or purchasing, and any applicable exchange control regulations and
taxes in the countries of their respective citizenship, residence or domicile.
Luxembourg - The Company is registered pursuant to Part I of the 2010 Act. However, such
registration does not require any Luxembourg authority to approve or disapprove either the adequacy
or accuracy of this Prospectus or the assets held in the various Sub-funds of the Company. Any
representations to the contrary are unauthorised and unlawful.
European Union - The Company qualifies as a UCITS and may apply for recognition under the
UCITS Directive, for marketing to the public in certain EEA Member States.
USA – This Prospectus does not constitute an offer or solicitation in respect of any US Person, as
defined herein. Neither the Shares nor any interest therein may be beneficially owned by any other US
Person except as provided below. Any re-offer or resale of any of the Shares in the United States or to
US Persons without the consent of the Fund is prohibited.
The Shares have not been registered under the US Securities Act of 1933, as amended (the US
Securities Act) or the securities laws of any state or political subdivision of the United States, and
may not be offered, sold, transferred or delivered, directly or indirectly, in the United States or to, or
for the account or benefit of, any US Person, except pursuant to an exemption from, or in a transaction
not subject to the requirements of, the US Securities Act and any applicable US state securities laws.
The Fund has not registered and does not intend to register under the United States Investment
Company Act of 1940, as amended (the Investment Company Act) in reliance on the exemption from
such registration pursuant to Section 3(c)(7) thereunder. Accordingly, the Shares are being offered and
sold only: (i) outside the United States to persons other than US Persons in offshore transactions that
meet the requirements of Regulation S under the US Securities Act; or (ii) to US Persons who are: (A)
"accredited investors" (as defined in Rule 501 of Regulation D promulgated under the US Securities
Act); (B) "qualified purchasers" (within the meaning of Section 2(a)(51) of the Investment Company
Act); and (C) "qualified eligible persons" (as defined in CFTC Rule 4.7 for non-natural persons and
CFTC Rule 4.7(a)(2) for natural persons).
Each applicant for the Shares must certify that it is: (a) not a US person as defined in Regulation S
under the US Securities Act and CFTC Rule 4.7 and not a US resident within the meaning of the
Investment Company Act; and (b) a person that is: (A) an "accredited investor" (as defined in Rule
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501 of Regulation D promulgated under the US Securities Act); (B) a "qualified purchaser" (within
the meaning of Section 2(a)(51) of the Investment Company Act); and (C) a "qualified eligible person"
(as defined in CFTC Rule 4.7 for non-natural persons and CFTC Rule 4.7(a)(2) for natural persons).
FATCA Requirements
FATCA provisions generally impose a reporting to the U.S. Internal Revenue Service of U.S. persons'
direct and indirect ownership of non-U.S. accounts and non-U.S. entities. Failure to provide the
requested information could lead to a 30% withholding tax applying to certain U.S. source income
(including dividends and interest) and gross proceeds from the sale or other disposal of property that
can produce U.S. source interest or dividends.
The basic terms of FATCA may include the Company as a "Financial Institution", such that in order
to comply, the Company may require all Shareholders to provide documentary evidence of their tax
residence and all other information deemed necessary to comply with the above mentioned legislation.
Despite anything else herein contained and as far as permitted by Luxembourg law, the Company shall
have the right to:
Withhold any taxes or similar charges that it is legally required to withhold, whether by law or
otherwise, in respect of any shareholding in the Company;
Require any Shareholder or beneficial owner of the Shares to promptly furnish such personal data as
may be required by the Fund in its discretion in order to comply with any law and/or to promptly
determine the amount of withholding to be retained;
Divulge any such personal information to any tax or regulatory authority, as may be required by law
or such authority,
Withhold the payment of any dividend or redemption proceeds to a Shareholder until the Company
holds sufficient information to enable it to determine the correct amount to be withheld;
and to consider any Shareholders that do not provide the relevant data/information for FATCA
purposes as a Restricted Person.
In addition the Company hereby confirms that it qualifies as Luxembourg Reporting Financial
Institutions as laid down in the FATCA rules and that it has registered and certified compliance with
FATCA with obtaining the GIIN (Global Intermediary Identification Number) n.
445HCM.99999.SL.442.
Prevailing language
The distribution of this Prospectus and the KIID(s) in certain countries may require that these
documents be translated into the official languages of those countries. Should any inconsistency arise
between the translated versions of this Prospectus, the English version will always prevail.
Data protection
Without prejudice to the above provision certain personal data of Shareholders (including, but not
limited to, the name, address and invested amount of each Shareholder) may be collected, recorded,
stored, adapted, transferred or otherwise processed and used by the Company, the Service Providers
and the financial intermediaries of such Shareholders. In particular, such data may be processed for
the purposes of account and distribution fee administration, anti-money laundering and terrorism
financing identification, tax identification, maintaining the register of Shareholders, processing
subscription, redemption and conversion orders and payments of dividends to Shareholders and to
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provide client-related services. Such information will not be passed on to any unauthorised third
persons.
The Company may sub-contract to another entity (the Processor) located in the European Union (such
as the Administrative Agent) the processing of personal data. The Management Company undertakes
not to transfer personal data to any third parties other than the Processor except if required by law
(including applicable tax treaties or regulations) or on the basis of a prior consent of the Shareholders.
Each Shareholder has a right of access to his/her/its personal data and may ask for a rectification
thereof in case where such data is inaccurate or incomplete.
By subscribing to the Shares, each investor consents to such processing of its personal data as may be
requested to comply with obligation such as, but not limited to, those set out under the FATCA and
the CRS Directive. This consent is formalised in writing in the subscription form used by the relevant
intermediary.
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GENERAL INFORMATION
Registered office
11-13 Boulevard de la Foire,
L-1528 Luxembourg.Grand Duchy of Luxembourg
Members of the board of directors
Class S1 Directors
Stephane Diederich, Director, CEO Alpha UCITS Limited, Chairman
Class S2 Directors
Eduard van Wijk, Conducting Officer, MDO Management Company S.A.
Riccardo del Tufo, Conducting Officer, MDO Management Company S.A.
Management Company
MDO Management Company S.A.
19, Rue de Bitbourg
L-1273 Luxembourg
Grand Duchy of Luxembourg
Members of the board of directors of the Management Company
Géry Daeninck (Chairman)
Independent Management Consultant
John Li How Cheong
Independent Management Consultant
Garvan Rory Pieters
Independent Management Consultant
Yves Wagner
Independent Management Consultant
Martin Vogel
Chief Executive Officer, MDO Management Company S.A.
Depositary
RBC Investor Services Bank S.A.
14, Porte de France
L - 4360 Esch-sur-Alzette
Grand Duchy of Luxembourg
Administrative & Domiciliary Agent
RBC Investor Services Bank S.A.
14, Porte de France
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L - 4360 Esch-sur-Alzette
Grand Duchy of Luxembourg
Investment Managers
Amber Capital Italia SGR S.p.A., with registered office in Piazzetta del Carmine 4, Milan, Italy, for the “Alpha
UCITS SICAV – Amber Equity Fund”;
Anavon Capital LLP, a limited partnership incorporated under the laws of England and Wales, with registered
office at 12 Portman Close, London W1H 6BR, United Kingdom for the “Alpha UCITS SICAV – Anavon Global
Equity Long/Short Fund”;
Quantmetrics Capital Management LLP a limited liability partnership incorporated under the laws of England
and Wales under number OC304666, and with registered office at 1 Red Place, London, W1K 6PL for the “Alpha
UCITS SICAV – Quantmetrics Multi Strategy Fund”;
Cube Capital Investment Management Limited, a limited liability company incorporated under the laws of
England and Wales, with registered office at 4th floor, 180 Great Portland St., London W1W 5QZ for the “Alpha
UCITS SICAV – Cube Global Opportunities Fund”;
Fair Oaks Capital Limited, a limited liability company incorporated under the laws of England and Wales, with
its registered office at 67-68 Jermyn Street, London SW1Y 6NY, United Kingdom for the “Alpha UCITS SICAV
– Fair Oaks Dynamic Credit Fund”
Auditor
Ernst & Young S.A.
7, Parc d'Activité Syrdall
L-5365 Munsbach
Grand Duchy of Luxembourg
Legal and tax adviser
Allen & Overy Luxembourg
33, Avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
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TABLE OF CONTENTS
Page
GENERAL INFORMATION............................................................................................................................. 6
DEFINITIONS ................................................................................................................................................... 9
GENERAL SECTION ...................................................................................................................................... 17
1. The Company ...................................................................................................................................... 17
2. Management, administration and distribution ..................................................................................... 18
3. Investment Objective, Policy and Restrictions .................................................................................... 26
4. Co-management ................................................................................................................................... 36
5. Description of the Shares ..................................................................................................................... 37
6. Subscription for Shares........................................................................................................................ 38
7. Conversion of Shares ........................................................................................................................... 41
8. Redemption of Shares.......................................................................................................................... 43
9. Restrictions on Transfer ...................................................................................................................... 45
10. Anti-money laundering and terrorist financing requirements ............................................................. 46
11. Market Timing and Late Trading ........................................................................................................ 47
12. Calculation of Net Asset Value ........................................................................................................... 47
13. Suspension of determination of Net Asset Value, issue, redemption and conversion of Shares ......... 49
14. Fiscal Year and reporting – Shareholders' meeting ............................................................................. 50
15. Fees and Expenses ............................................................................................................................... 54
16. Dividend policy ................................................................................................................................... 54
17. Liquidation and merger of Sub-funds or Classes ................................................................................ 55
18. Taxation ............................................................................................................................................... 57
19. Risk factors .......................................................................................................................................... 60
20. Soft commissions ................................................................................................................................ 75
21. Conflicts of interests ............................................................................................................................ 75
SPECIAL SECTIONS:
SPECIAL SECTION I - Alpha UCITS SICAV – Amber Equity Fund ........................................................... 73
SPECIAL SECTION II - Alpha UCITS SICAV - Anavon Global Equity Long/Short Fund .......................... 88
SPECIAL SECTION III - Alpha UCITS SICAV – Quantmetrics Multi Strategy Fund ............................... 125
SPECIAL SECTION IV - Alpha UCITS SICAV – Cube Global Opportunities Fund ................................. 137
SPECIAL SECTION IV - Alpha UCITS SICAV – Fair Oaks Dynamic Credit Fund ................................... 142
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DEFINITIONS
In this Prospectus, the following terms have the following meanings:
1915 Act means the Luxembourg act of 10 August 1915 on commercial companies, as amended;
2005 Savings Acts means the Luxembourg acts dated 21 June 2005, which have implemented in Luxembourg
the EU Savings Directive and ratified the treaties entered into by Luxembourg and certain dependent and
associated territories of EU Member States;
2010 Act means the act dated 17 December 2010 on undertakings for collective investment;
2014 Act means the act dated 28 July 2014 regarding the immobilisation of bearer shares and units;
Accumulation Class means a Class for which it is not intended to make distributions, as set out in the relevant
Special Section;
Administrative Agent means RBC Investor Services Bank, in its capacity as central administration and
registrar and transfer agent of the Company;
Administration Agreement means the agreement between the Company, the Management Company and the
Administrative Agent as amended, supplemented or otherwise modified from time to time;
Affiliate means
(a) in the case of a company:
any company which is its direct or indirect holding company or subsidiary or a direct or indirect
subsidiary of that holding company; or
a company (or a direct or indirect subsidiary of a company) or other legal entity which controls or is
controlled by the person concerned;
in the case of an individual, the spouse or direct descendants and ascendants of any kind, and any
company directly or indirectly controlled by such person and his associates within the meaning of
paragraph (a) of this definition; or
(b) in the case of an entity other than a company, the members and any entity directly or indirectly
controlled by such person and his associates within the meaning of paragraph (a) of this definition,
except in, all cases, any entity in which the Company holds an Investment;
Articles means the articles of incorporation of the Company as the same may be amended, supplemented or
otherwise modified from time to time;
Auditor means Ernst & Young S.A.;
Authorised Payment Currency means the currencies in which, in addition to the Reference Currency,
subscriptions and redemptions for Shares in a particular Class may be made. Unless otherwise specified in
respect of a Sub-fund in the relevant Special Section, the Authorised Payment Currency will be the Euro;
Board means the board of directors of the Company;
Business Day means, unless otherwise defined in respect of a specific Sub-fund in the relevant Special Section,
each Luxembourg Banking Day;
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CFTC means the United States Commodity Futures Trading Commission;
Circular 04/146 means the CSSF circular 04/146 on the protection of UCIs and their investors against Late
Trading and Market Timing practices;
Class means a class of Shares issued in any Sub-fund;
Class Launch Date means the date, as determined by the Board, on which the Company opens a Class for
subscription;
Class S Directors means the Class S1 Directors and the Class S2 Directors;
Class S1 Director means any director appointed by a general meeting in accordance with article 13 of the
Articles out of a list of directors proposed by the holder of Class S1 Shares;
Class S2 Director means any director appointed by a general meeting in accordance with article 13 of the
Articles out of a list of directors proposed by the holder of Class S2 Shares;
Clearstream means Clearstream Banking, société anonyme;
Company means Alpha UCITS SICAV, a public limited liability company incorporated as an investment
company with variable capital under the laws of Luxembourg and registered pursuant to part I of the 2010 Act;
Control means, in relation to an entity: (a) the holding, directly or indirectly, of the majority votes which may
be cast at that entity's ordinary shareholders', partners' or members' meetings or the votes necessary to direct
or cause the direction of that entity's ordinary shareholders', partners' or members' meetings; and (b) any
contractual relationship by virtue of which a person can direct the business activities of a company or other
entity and "controlled" or "to control" will be construed accordingly;
Conversion Fee means the fee that may be paid by Shareholders in the event of a conversion of Shares as
described under Section 7 of the General Section;
Cross-investing Sub-fund has the meaning ascribed to this term in Section 3.47;
CRS Directive means the Council Directive 2014/107/EU of 9 December 2014 amending Directive
2011/16/EU as regards mandatory automatic exchange of information in the field of taxation;
CSSF means the Commission de Surveillance du Secteur Financier, the Luxembourg supervisory authority of
the financial sector;
Depositary means RBC Investor Services Bank, in its capacity as depositary of the Company;
Depositary Agreement means the agreement between the Company and the Depositary as amended,
supplemented or otherwise modified from time to time;
Dilution Levy means the additional fee that may be levied in case of subscription, redemption or conversion
of Shares to mitigate the adverse effect of dilution in a Sub-Fund, as described under Section 15.14 of the
General Section, the rate of which is set out in the relevant Special Section
Directive 78/660/EEC means Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) g) of the
Treaty on the annual accounts of certain types of companies, as amended from time to time;
Directive 83/349/EEC means Council Directive 83/349/EEC of 13 June 1983 based on the Article 54 (3) (g)
of the Treaty on consolidated accounts, as amended from time to time;
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Directive 2009/65/EC means Directive 2009/65/EC of the European Parliament and of the Council of 13 July
2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS);
Directors means the directors of the Company, whose details are set out in this Prospectus and/or the annual
and semi-annual reports;
Distribution Class means a Class for which it is intended to make distributions, as set out in the relevant
Special Section;
Distributors means any person from time to time appointed or authorised by the Company and the
Management Company to distribute the Shares of one or more Sub-funds or Classes;
EEA means the European Economic Area;
Eligible Investments means eligible investments for UCITS within the meaning of Article 41 (1) of the 2010
Act;
EPM Techniques means efficient portfolio management techniques within the meaning of Section 3.29 of the
General Section;
ESMA Guidelines 2014/937 means ESMA Guidelines 2014/937 of 1 August 2014 on ETFs and other UCITS
issues;
EU means the European Union whose member States at the date of this Prospectus include Austria, Belgium,
Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,
Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden and the United Kingdom;
EU Member State means a member State of the EU;
EU Savings Directive means the Council Directive 2003/48/EC of 3 June 2003 on the taxation of savings
income in the form of interest payments;
EUR or € means the Euro, the single currency of the EU Member States that have adopted the Euro as their
lawful currency;
Euroclear means Euroclear Bank S.A./N.V. as the operator of the Euroclear System;
First Class Institutions means first class financial institutions selected by the Company, subject to prudential
supervision and belonging to the categories approved by the CSSF for the purposes of the OTC Derivative
transactions and EPM Techniques transactions;
Fiscal Year means the twelve (12) month period ending on 30 June in each year, except for the first fiscal year
which started on the date of incorporation of the Company and has ended on 30 June 2012;
General Section means the general section of the Prospectus that sets out the general terms and conditions
applicable to all Sub-funds of the Company, unless otherwise provided in any of the Special Sections;
Initial Offering Period or Initial Offering Date means, with respect to each Sub-fund, the first offering of
Shares in a Sub-fund made pursuant to the terms of the Prospectus and the relevant Special Section;
Initial Subscription Price means the price at which Shares are issued in respect of subscriptions received
during the Initial Offering Period or on the Initial Offering Date or on the Class Launch Date, as determined
for each Sub-fund and Class in the relevant Special Section;
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Institutional Investors means investors who qualify as institutional investors according to Luxembourg Law;
Investment Adviser means such person from time to time appointed by the Management Company, with the
approval of the Company, as the investment adviser to a particular Sub-fund and disclosed (if and to the extent
required) in the relevant Special Section;
Investment Company Act means the United States Investment Company Act of 1940, as amended;
Investment Manager means such person from time to time appointed by the Management Company, with the
consent of the Company, as the investment manager to a particular Sub-fund and disclosed in the relevant
Special Section;
Investment Objective means the predefined investment objective of a Sub-fund as specified in the relevant
Special Section;
Investment Policy means the predefined investment policy of a Sub-fund as specified in the relevant Special
Section;
Investment Restrictions means the investment restrictions applicable to the Sub-funds. The investment
restrictions applicable to all Sub-funds are set out under Section 3 of the General Section. Additional
investment restrictions may be applicable to each Sub-fund as set out in the relevant Special Section;
KIID means the key investor information document in respect of each Sub-fund or Class (as appropriate);
Late Trading means the acceptance of a subscription, conversion or redemption order after the time limit
fixed for accepting orders (cut-off time) on the relevant day and the execution of such order at the price based
on the net asset value applicable to such same day;
Launch Date means the date on which the Company issues Shares relating to a Sub-fund in respect of
subscriptions received during the Initial Offering Period or on the Initial Offering Date as set out in respect of
each Sub-fund in the relevant Special Section;
Lending Agent(s) means the entity(ies) appointed as the agent(s) in charge of lending securities on behalf of
the Sub-Fund(s) to securities borrowers in line with the Lending Agent(s) securities lending program.
Luxembourg means the Grand Duchy of Luxembourg;
Luxembourg Banking Day means a day on which banks are generally open for business in Luxembourg
during the whole day (excluding Saturdays and Sundays and public holidays);
Luxembourg Law means the applicable laws of the Grand Duchy of Luxembourg;
Management Company means MDO Management Company S.A.;
Management Company Agreement means the agreement between the Company and the Management
Company as amended, supplemented or otherwise modified from time to time;
Management Company Fee means the fee to which the Management Company is entitled out of the assets
of the Company as set out in respect of each Class in each Sub-fund in the Special Sections;
Market Timing means any market timing practice within the meaning of Circular 04/146 or as that term may
be amended or revised by the CSSF in any subsequent circular, i.e., an arbitrage method through which an
investor systematically subscribes and redeems or converts units or shares of the same Luxembourg
undertaking for collective investment within a short time period, by taking advantage of time differences and/or
imperfections or deficiencies in the methods of determination of the net asset value of the UCI;
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Maturity Date means the date indicated in the relevant Special Section on which the outstanding Shares will
be redeemed, the Sub-fund being thereafter liquidated. Unless a Maturity Date is indicated in the relevant
Special Section, Sub-funds will have no Maturity Date;
Mémorial means the Luxembourg Mémorial C, Recueil des Sociétés et Associations;
Minimum Holding Amount means the minimum number of Shares or amount which a Shareholder must hold
at any time in a particular Class in a particular Sub-fund. Unless otherwise specified in respect of a specific
Class in a Sub-fund in the relevant Special Section, the Minimum Holding Amount is one Share;
Minimum Net Asset Value means the minimum Net Asset Value for a Sub-fund to be operated in an
economically efficient manner. Unless otherwise specified in respect of a Sub-fund in the relevant Special
Section, the Minimum Net Asset Value per Sub-fund will be EUR10 million (or the equivalent in the Reference
Currency of the relevant Sub-fund);
Minimum Subscription Amount means the minimum number of Shares or amount which a Shareholder or
subscriber must subscribe for in a particular Class in a particular Sub-fund in which the Shareholder or
subscriber does not hold Share(s) prior to such subscription. Unless otherwise specified in respect of a specific
Class in a Sub-fund in the relevant Special Section, the Minimum Subscription Amount is one Share;
Minimum Subsequent Subscription Amount means the minimum number of Shares or amount which a
Shareholder must subscribe for in a particular Class in a particular Sub-fund when subscribing for additional
Shares of the relevant Class. Unless otherwise specified in respect of a specific Class in a Sub-fund in the
relevant Special Section, the Minimum Subsequent Subscription Amount is one Share;
Money Market Instruments means instruments normally dealt in on a money market which are liquid and
have a value which can be accurately determined at any time;
NAV Calculation Day means the Luxembourg Banking Day on which the Net Asset Value is calculated in
respect of a specific Transaction Day. Unless otherwise provided for in respect of a specific Sub-fund in the
relevant Special Section and provided that the subscription, conversion or redemption request be received on
the Transaction Day before the applicable subscription, conversion or redemption deadline, the NAV
Calculation Day will be the first Luxembourg Banking Day following the relevant Transaction Day;
Net Asset Value or NAV means the net asset value of the Company, each Sub-fund, each Class and each Share
as determined in accordance with Section 12 of the General Section;
OECD means the Organisation for Economic Co-operation and Development;
OECD Member State means any of the member States of the OECD;
OTC means over-the-counter;
OTC Derivative means any financial derivative instrument dealt in over-the-counter;
Professional Investors means investors who are deemed to be professional clients in terms of Annex III of
the Luxembourg law of 5 April 1993 on the financial sector, as amended.
Prospectus means this prospectus, as amended or supplemented from time to time;
Redemption Fee means the fee that may be levied in case of redemption of Shares of any Class in any Sub-
fund, details of which are set out in the relevant Special Section;
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Redemption Cut-Off Time means the deadline for the submission of redemption requests as set out in Section
8.1 of the General Section, unless otherwise specified in respect of a specific Sub-fund in the relevant Special
Section;
Reference Currency means, in relation to each Sub-fund and Class, the currency in which the Net Asset Value
of such Sub-fund or Class is calculated, as stipulated in the relevant Special Section;
Regulated Market means a regulated market as defined in the Council Directive 2004/39/EEC dated 21 April
2004 on markets in financial instruments or any other market established in the EEA which is regulated,
operates regularly and is recognised and open to the public;
Restricted Person means any US Person and any person, determined in the sole discretion of the Board as
being not entitled to subscribe or hold Shares in the Company or any Sub-fund or Class if, in the opinion of
the Board, (i) such person would not comply with the eligibility criteria of a given Class or Sub-fund, (ii) a
holding by such person would cause or is likely to cause the Company some pecuniary, tax or regulatory
disadvantage or (iii) a holding by such person would cause or is likely to cause the Company to be in breach
of the law or requirements of any country or governmental authority applicable to the Company;
Retail Investor means any investor not qualifying as an Institutional Investor;
Service Agreements means the Depositary Agreement, the Administration Agreement, the Management
Company Agreement and any other agreement between the Company on account of one or more Sub-fund(s)
and any other Service Provider;
Servicing Fee means a fee that may be levied by a Sub-fund to pay fees out of the assets of the relevant Sub-
fund to specialised service providers in relation to the structuring, launch and running of the relevant Sub-fund
which are set out in the relevant Special Section;
Service Providers means the Management Company, the Investment Manager (if any), the Investment
Adviser (if any), the Depositary and the Administrative Agent and any other person who provides services to
the Company from time to time (including, for the avoidance of doubt, any Investment Adviser or Investment
Manager);
Shareholder means any registered holder of Shares;
Shares means all shares issued by the Company from time to time, representing the total outstanding shares;
Shares are issued in registered form. The Board of Directors or the person duly appointed by it may decide to
create fractions of Shares.
Special Section means each and every supplement to this Prospectus describing the specific features of a Sub-
fund. Each such supplement is to be regarded as an integral part of the Prospectus;
Sub-fund means a separate portfolio of assets established for one or more Classes of the Company which is
invested in accordance with a specific Investment Objective. The specifications of each Sub-fund will be
described in the relevant Special Section;
Subscription Cut-Off Time means the deadline for the submission of subscription requests as set out in
Section 6.5(a) of the General Section, unless otherwise specified in respect of a specific Sub-fund in the
relevant Special Section;
Subscription Fee means the fee that may be levied in case of subscription of Shares of any Class in any Sub-
fund, details of which are set out in the relevant Special Section;
Target Sub-fund has the meaning ascribed to this term in Section 3.47;
15
Territories means the Netherlands Antilles, Aruba, Jersey, Guernsey, Isle of Man, Montserrat and the British
Virgin Islands;
Transaction Day means (unless otherwise defined in respect of a specific Sub-fund in the relevant Special
Section) a Business Day on which subscriptions for, conversions from and redemptions of Shares can be made
in order to be dealt with by the Administrative Agent on the basis of the Net Asset Value that will be calculated
on the relevant NAV Calculation Day, based upon the price as of the relevant Transaction Day;
Transferable Securities means:
shares and other securities equivalent to shares;
bonds and other debt instruments;
any other negotiable securities which carry the right to acquire any such transferable securities by
subscription or to exchanges, with the exclusion of EPM techniques;
UCI means an undertaking for collective investment within the meaning of article 1, paragraph (2), points a)
and b) of the UCITS Directive, whether situated in a EU Member State or not, provided that:
such UCI is authorised under laws which provide that it is subject to supervision that is considered by
the CSSF to be equivalent to that laid down in EU law, and that cooperation between authorities is
sufficiently ensured;
the level of guaranteed protection for Shareholders in such UCI is equivalent to that provided for
Shareholders in a UCITS, and in particular that the rules on asset segregation, borrowing, lending, and
uncovered sales of Transferable Securities and Money Market Instruments are equivalent to the
requirements of the UCITS Directive;
the business of such UCI is reported in half-yearly and annual reports to enable an assessment to be
made of the assets and liabilities, income and operations over the reporting period;
UCITS means an undertaking for collective investment in transferable securities under the UCITS Directive;
UCITS Directive means Directive 2009/65/EC;
USD means the currency of the United States of America;
US Person means a person that is a US person for purposes of Regulation S under the US Securities Act and
CFTC Rule 4.7 or a US resident within the meaning of the Investment Company Act, which includes any
natural person who is a resident of the United States, any partnership or corporation organized or incorporated
under the laws of the United States, any estate of which any executor or administrator is a US person and the
income of such estate is subject to United States income tax regardless of source, any trust of which any trustee
is a US person and the income of such trust is subject to United States income tax regardless of source and any
other US person that is a US person or US resident for purposes of Regulation S under the US Securities Act,
the Investment Company Act and CFTC Rule 4.7;
US Securities Act means the US Securities Act of 1933.
Well-Informed Investor(s) means an investor who is deemed to be a well-informed investor within the
meaning of the Luxembourg law of 13 February 2007, namely, Institutional Investors, Professional Investors
and any other investor who fulfils the following conditions:
1. he has declared in writing that he adheres to the status of well-informed investor, and
16
2. he invests at least 125,000 EUR in the Company, or
3. he has been the subject of an assessment from a credit institution within the meaning of Regulation
2006/48/EC, an investment firm within the meaning of Directive 2004/39/EC or a management company
within the meaning of Directive 2009/65/EC, which certifies his experience and knowledge to adequately
appraise an investment in the Company;
17
GENERAL SECTION
The General Section applies to all Sub-funds of the Company. The specific features of each Sub-fund
and Class are set forth in the Special Sections.
1. The Company
Form - Legal regime
1.1 The Company is an open-ended investment company organised under the laws of Luxembourg as a
société d'investissement à capital variable (SICAV), incorporated under the form of a public limited
liability company (société anonyme) on 29 June 2011 and authorised under part I of the 2010 Act. The
Company is registered with the Luxembourg trade and companies register under number B 161924.
Its original Articles were published in the Mémorial on 15 July 2011. The Company is subject to the
provisions of the 2010 Act and of the 1915 Act.
1.2 The registration of the Company pursuant to the 2010 Act constitutes neither approval nor disapproval
by any Luxembourg authority as to the adequacy or accuracy of this Prospectus or as to the assets held
in the various Sub-funds.
1.3 The Shares are not currently listed on the Luxembourg Stock Exchange but the Board may decide to
quote one or more Classes of a Sub-fund on the Luxembourg or any other stock exchange, regulated
or alternative market.
1.4 There is no limit to the number of Shares which may be issued. Shares will be issued to subscribers in
registered form.
1.5 Shares shall have the same voting rights and shall have no pre-emptive subscription rights. In the event
of the liquidation of the Company, each Share is entitled to its proportionate share of the Company's
assets after payment of the Company's debts and expenses, taking into account the Company's rules
for the allocation of assets and liabilities.
1.6 The initial subscribed capital of the Company was of EUR 31,000. The minimum share capital of the
Company must at all times be EUR 1,250,000 which amount has to be attained within six months of
the Company's authorisation to operate as a UCI, being provided that Shares of a Target Sub-fund held
by a Cross-investing Sub-fund shall not be taken into account for the purpose of the calculation of the
EUR 1,250,000 minimum capital requirement. The Company's share capital is at all times equal to its
Net Asset Value. The Company's share capital is automatically adjusted when additional Shares are
issued or outstanding Shares are redeemed, and no special announcements or publicity are necessary
in relation thereto.
Umbrella structure - Sub-funds and Classes
1.7 The Company has an umbrella structure consisting of one or several Sub-funds. A separate portfolio
of assets is maintained for each Sub-fund and is invested in accordance with the Investment Objective
and Investment Policy applicable to that Sub-fund. The Investment Objective, Investment Policy, as
well as the other specific features of each Sub-fund (such as risk profile and duration (including limited
duration)) are set forth in the relevant Special Section.
1.8 The rights of the Shareholders and creditors relating to a Sub-fund or arising from the setting-up,
operation and liquidation of a Sub-fund are limited to the assets of that Sub-fund. The assets of a Sub-
fund are exclusively dedicated to the satisfaction of the rights of the Shareholders relating to that Sub-
fund and the rights of those creditors whose claims have arisen in connection with the setting-up,
operation and liquidation of that Sub-fund.
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1.9 Each Sub-fund is treated as a separate entity and operates independently, each portfolio of assets being
invested for the exclusive benefit of this Sub-fund. A purchase of Shares relating to one particular Sub-
fund does not give the holder of such Shares any rights with respect to any other Sub-fund.
1.10 Within a Sub-fund, the Board or the person duly appointed by it may decide to issue one or more
Classes the assets of which will be commonly invested but subject to different fee structures,
distribution, marketing targets, currency or other specific features, including special rights as regards
the appointment of Class S Directors in accordance with article 13 of the Articles. A separate Net Asset
Value per Share, which may differ as a consequence of these variable factors, will be calculated for
each Class.
1.11 The Board or the person duly appointed by it may, at any time, create additional Classes whose features
may differ from the existing Classes and additional Sub-funds whose Investment Objectives may differ
from those of the Sub-funds then existing. Upon creation of new Sub-funds or Classes, the Prospectus
will be updated, if necessary, or supplemented by a new Special Section.
1.12 The Sub-funds are described in more detail in the relevant Special Sections.
1.13 Investors should note however that some Sub-funds or Classes may not be available to all investors.
The Company retains the right to offer only one or more Classes for purchase by investors in any
particular jurisdiction in order to conform to local law, customs or business practice or for fiscal or
any other reason. The Company may further reserve one or more Sub-funds or Classes to Institutional
Investors only.
Term of the Company - Term of the Sub-funds
1.14 The Company will exist for an indefinite period. However, the Company will be automatically put into
liquidation upon the termination of a Sub-fund if no further Sub-fund is active at that time.
1.15 The Sub-funds may be created with a limited duration in which case Shares for which no redemption
request has been submitted in respect of the Maturity Date as set out in the relevant Special Section,
will be compulsory redeemed at the Net Asset Value per Share calculated as at such Maturity Date.
The Sub-fund will be liquidated on or around the Maturity Date.
2. Management, administration and distribution
2.1 The Board
(a) The Company shall be managed by the Board. The Board is vested with the broadest powers
to perform all acts of administration and disposition in the Company's interests. All powers
not expressly reserved by law to the general meeting of Shareholders fall within the
competence of the Board.
(b) The Board will issue, in at least one Sub-fund, at least one Class S1 Share and one Class S2
Share, as more fully described in article 13 of the Articles and the relevant Special Section.
The holders of Class S1 and Class S2 Shares will be entitled to propose to the general meeting
of Shareholders a list containing the names of candidates for the position of Director.
(c) The Board must be composed at all times of at least three (3) Directors (including the chairman
of the Board). One (1) Director must be appointed out of the list proposed by the holder(s) of
Class S1 Share(s) and two (2) Directors must be appointed out of the list proposed by the
holder(s) of Class S2 Share(s).
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(d) The list of candidates proposed by each holder of Class S Shares shall indicate a number of
candidates equal to at least twice the number of Directors to be appointed as Class S1 Director
and Class S2 Director.
(e) Any Director may be removed with or without cause or be replaced at any time by resolution
adopted by the general meeting of Shareholders, provided however that if a Class S Director
is removed, the remaining directors must call for an extraordinary general meeting of
Shareholders without delay in order for a new Class S Director to be appointed in his/her place
in accordance with the requirements of article 13 of the Articles. The new Class S Director so
appointed will be chosen from the candidates on the list presented by the relevant Class.
(f) The Company may indemnify any Director or officer, and his heirs, executors and
administrators against expenses reasonably incurred by him or her in connection with any
action, suit proceeding to which he or she may be made a party by reason of his or her being
or having been a director or officer of the Company or, at its request, of any other company
of which the Company is a shareholder or creditor and from which he or she is not entitled to
be indemnified, except in relation to matters as which he or she shall be finally adjudged in
such action, suit or proceeding to be liable for gross negligence or wilful misconduct; in the
event of a settlement, indemnification shall be provided only in connection with such matters
covered by the settlement as to which the Company is advised by counsel that the person to
be indemnified did not commit such a breach of duty. The foregoing right of indemnification
shall not exclude other rights to which he or she may be entitled.
Composition of the Board
(g) The Board is currently composed as follows:
Class S1 Directors
Stephane Diederich, Director and CEO of Alpha UCITS Limited, Chairman
Class S2 Directors
Eduard van Wijk, Conducting Officer, MDO Management Company S.A.
Riccardo del Tufo, Conducting Officer, MDO Management Company S.A.
(h) The Board will appoint a chairman. The chairman will be appointed by the Board out of a list
of Class S1 Directors. The chairman will not have a casting vote in case of a tied vote.
2.2 Management Company
(a) Corporate information
The Board has appointed MDO Management Company S.A. (the Management Company)
as the management company of the Company to serve as its designated management company
within the meaning of Part I of the 2010 Act pursuant to a management company agreement
dated 8 July 2011 with effect as of 29 June 2011 (the Management Company Agreement).
The Management Company has been formed following a partial demerger of MDO Services
and a merger of MDO Services with MDO Management Company with effect as of 3
September 2013. The demerger and merger proposal was published in the official gazette of
the Grand Duchy of Luxembourg Mémorial C, Recueil des Sociétés et Associations on 2
August 2013.
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The Management Company is a company incorporated in Luxembourg as a société anonyme
on 2 August 2013 for an undetermined period of time and the latest revision of the articles of
association were published in the official gazette of the Grand Duchy of Luxembourg
Mémorial C, Receuil des Sociétés et Associations (hereinafter referred to as “Mémorial”) in
Luxembourg on 2 August 2014. Its fully paid-up share capital amounts to EUR 1,700,000.
The Management Company is registered with the Luxembourg Trade and Companies Register
under number B 96744 and is approved as a management company under Chapter 15 of the
2010 Act.
Its board of directors is composed as follows:
Géry Daeninck, Independent Management Consultant
Martin Peter Vogel, CEO, MDO Management Company S.A.
Garvan Rory Pieters, Independent Management Consultant
John Li How Cheong, Director, Independent Management Consultant
Yves Wagner, Independent Management Consultant
(b) Duties
The Management Company will provide, subject to the overall control of the Board and
without limitation, (i) investment management services, (ii) administrative services and (iii)
marketing, distribution and sales services to the Company. The rights and duties of the
Management Company are further laid down in articles 107 et seq. of the 2010 Act. The
Management Company must at all times act honestly and fairly in conducting its activities in
the best interest of the Shareholders and in conformity with the 2010 Act, the Prospectus and
the Articles.
The Management Company is vested with the day-to-day administration of the Company. In
fulfilling its duties as set forth by the 2010 Act and the Management Company Agreement,
the Management Company is authorised, for the purpose of more efficient conduct of its
business, to delegate, under its responsibility and control, and with the prior consent of the
Company and subject to the approval of the CSSF, part or all of its functions and duties to any
third party, which, having regard to the nature of the functions and duties to be delegated, must
be qualified and capable of undertaking the duties in question. The Management Company
shall remain liable to the Company in respect of all matters so delegated.
The Management Company will require any such agent to which it intends to delegate its
duties to comply with the provisions of the Prospectus, the Articles and the relevant provisions
of the Management Company Agreement.
In relation to any delegated duty, the Management Company shall implement appropriate
control mechanisms and procedures, including risk management controls, and regular
reporting processes in order to ensure an effective supervision of the third parties to whom
functions and duties have been delegated and that the services provided by such third party
service providers are in compliance with the Articles, the Prospectus and the agreement
entered into with the relevant third party service provider.
The Management Company shall be careful and diligent in the selection and monitoring of the
third parties to whom functions and duties may be delegated and ensure that the relevant third
21
parties have sufficient experience and knowledge as well as the necessary authorisations
required to carry out the functions delegated to them.
The following functions have been delegated by the Management Company to third parties:
investment management of certain Sub-funds, administration, marketing and distribution, as
further set forth in this Prospectus and in the Special Sections.
The Management Company Agreement has been entered into for an undetermined period of
time.
(c) Remuneration policy
The Management Company has in place a remuneration policy in line with the Directive 2014/91/EU
of the European Parliament and of the Council of 23 July 2014 amending 2009/65/EC of the European
Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and
administrative provisions relating to undertakings for collective investment in transferable securities.
The remuneration policy sets out principles applicable to the remuneration of senior management, all
staff members having a material impact on the risk profile of the financial undertakings as well as all
staff members carrying out independent control functions.
In particular, the remuneration policy complies with the following principles in a way and to the extent
that is appropriate to the size, internal organisation and the nature, scope and complexity of the
activities of the Management Company:
1. it is consistent with and promotes sound and effective risk management and does not
encourage risk taking which is inconsistent with the risk profiles, rules or the Articles;
2. if and to the extent applicable, the assessment of performance is set in a multi-year framework
appropriate to the holding period recommended to the investors of the Company in order to
ensure that the assessment process is based on the longer-term performance of the Company
and its investment risks and that the actual payment of performance-based components of
remuneration is spread over the same period;
3. it is in line with the business strategy, objectives, values and interests of the Management
Company and the Company and of the Shareholders, and includes measures to avoid conflicts
of interest;
4. fixed and variable components of total remuneration are appropriately balanced and the fixed
component represents a sufficiently high proportion of the total remuneration to allow the
operation of a fully flexible policy on variable remuneration components, including the
possibility to pay no variable remuneration component.
The remuneration policy is determined and reviewed at least on an annual basis by a remuneration
committee.
The details of the up-to-date remuneration policy of the Management Company, including, but not
limited to, a description of how remuneration and benefits are calculated, the identity of the persons
responsible for awarding the remuneration and benefits, including the composition of the remuneration
committee, are available on http://www.mdo-manco.com/remuneration-policy, a paper copy will be
made available free of charge upon request.
2.3 Investment Manager
(a) The Management Company may, with the consent of the Company and subject to compliance
with the Prospectus, determine that an Investment Manager be appointed to carry out
investment management services and to be responsible for the relevant Sub-fund's investment
22
activities within the parameters and restrictions set out in this Prospectus and the relevant
Special Section.
(b) The Investment Manager will provide or procure each Sub-fund investment advisory and
investment management services, pursuant to the provisions of the Investment Management
Agreement and in accordance with the investment policy, objective and restrictions of the
relevant Sub-fund as set out in the Articles and Prospectus and with the aim to achieve the
Sub-fund's investment objective.
(c) Any such Investment Manager may be assisted by one or more Investment Advisers or
delegate its functions, with the approval of the CSSF, the Management Company and the
Board, to one or more sub-managers. In case sub-managers/advisers are appointed, the
relevant Special Section will be updated.
(d) Unless otherwise stated in the relevant Special Section, the Investment Manager is responsible
for, among other matters, identifying and acquiring the investments of the Company. The
Investment Manager is granted full power and authority and all rights necessary to enable it
to manage the investments of the relevant Sub-funds and provide other investment
management services to assist the Company to achieve the investment objectives and policy
set out in this Prospectus and any specific investment objective and policy set out in the
relevant Special Section. Consequently, the responsibility for making decisions to buy, sell or
hold a particular security or asset rests with the Management Company, the Investment
Manager and, as the case may be, the relevant sub-investment manager appointed by them,
subject always to the overall policies, direction, control and responsibility of the Board and
the Management Company.
(e) If an Investment Manager is entitled to receive a remuneration out of the assets of the relevant
Sub-fund, then such remuneration will be disclosed in the relevant Special Section.
2.4 Investment Adviser(s)
(a) The Management Company or an Investment Manager may appoint one or more Investment
Advisers to provide advisory services in respect of a Sub-fund as stipulated in the relevant
Special Section.
(b) If an Investment Adviser is entitled to receive a remuneration directly out of the assets of the
relevant Sub-fund, then such remuneration will be disclosed in the relevant Special Section.
2.5 Depositary
Depositary Bank’s functions
The Company has appointed RBC Investor Services Bank S.A. (“RBC”), having its registered office
at 14, Porte de France, L-4360 Esch-sur-Alzette, Grand Duchy of Luxembourg, as depositary bank
and principal paying agent (the “Depositary”) of the Company with responsibility for the
1. safekeeping of the assets,
2. oversight duties and
3. cash flow monitoring
4. principal paying agent functions
in accordance with the Law, and the Depositary Bank and Principal Paying Agent Agreement dated
18 March 2016 and entered into between the Company and RBC (the “Depositary Bank and
Principal Paying Agent Agreement”).
23
RBC Investor Services Bank S.A. is registered with the Luxembourg Register for Trade and
Companies (RCS) under number B-47192 and was incorporated in 1994 under the name “First
European Transfer Agent”. It is licensed to carry out banking activities under the terms of the
Luxembourg law of 5 April 1993 on the financial services sector and specialises in custody, fund
administration and related services. Its equity capital as at 31 October 2015 amounted to approximately
EUR 983,781,177.-.
The Depositary has been authorized by the Company to delegate its safekeeping duties (i) to delegates
in relation to other Assets and (ii) to sub-custodians in relation to Financial Instruments and to open
accounts with such sub-custodians.
An up to date description of any safekeeping functions delegated by the Depositary and an up to date
list of the delegates and sub-custodians may be obtained, upon request, from the Depositary or via the
following website link:
http://gmi.rbcits.com/rt/gss.nsf/Royal+Trust+Updates+Mini/53A7E8D6A49C9AA285257FA800499
9BF?opendocument.
The Depositary shall act honestly, fairly, professionally, independently and solely in the interests of
the Company and the Shareholders in the execution of its duties under the Law and the Depositary
Bank and Principal Paying Agent Agreement.
Under its oversight duties, the Depositary will:
1. ensure that the sale, issue, repurchase, redemption and cancellation of Shares effected on
behalf of the Company are carried out in accordance with the Law and with the Articles,
2. ensure that the value of Shares is calculated in accordance with the Law and the Articles,
3. carry out the instructions of the Company or the Management Company acting on behalf of
the Company, unless they conflict with the Law or the Articles,
4. ensure that in transactions involving the Company’s assets, the consideration is remitted to the
Company within the usual time limits,
5. ensure that the income of the Company is applied in accordance with the Law or the Articles.
The Depositary will also ensure that cash flows are properly monitored in accordance with the Law
and the Depositary Bank and Principal Paying Agent Agreement.
Depositary Bank’s conflicts of interests
From time to time conflicts of interests may arise between the Depositary and the delegates, for
example where an appointed delegate is an affiliated group company which receives remuneration for
another custodial service it provides to the Company. On an ongoing basis, the Depositary analyzes,
based on applicable laws and regulations any potential conflicts of interests that may arise while
carrying out its functions. Any identified potential conflict of interest is managed in accordance with
the RBC’s conflicts of interests’ policy which is subject to applicable laws and regulation for a credit
institution according to and under the terms of the Luxembourg law of 5 April 1993 on the financial
services sector.
Further, potential conflicts of interest may arise from the provision by the Depositary and/or its
affiliates of other services to the Company, the Management Company and/or other parties. For
example, the Depositary and/or its affiliates may act as the depositary, custodian and/or administrator
of other funds. It is therefore possible that the Depositary (or any of its affiliates) may in the course of
its business have conflicts or potential conflicts of interest with those of the Company, the Management
Company and/or other funds for which the Depositary (or any of its affiliates) act.
RBC has implemented and maintains a management of conflicts of interests’ policy, aiming namely
at:
24
1. Identifying and analysing potential situations of conflicts of interests;
2. Recording, managing and monitoring the conflicts of interests situations in:
1. Implementing a functional and hierarchical segregation making sure that operations
are carried out at arm’s length from the Depositary business;
2. Implementing preventive measures to decline any activity giving rise to the conflict
of interest such as:
1. RBC and any third party to whom the custodian functions have been delegated
do not accept any investment management mandates;
2. RBC does not accept any delegation of the compliance and risk management
functions.
3. RBC has a strong escalation process in place to ensure that regulatory
breaches are notified to compliance which reports material breaches to senior
management and the board of directors of RBC.
4. A dedicated permanent internal audit department provides independent,
objective risk assessment and evaluation of the adequacy and effectiveness of
internal controls and governance processes.
RBC confirms that based on the above no potential situation of conflicts of interest could be identified.
An up to date information on conflicts of interest policy referred to above may be obtained, upon
request, from the Depositary or via the following website link:
https://www.rbcits.com/AboutUs/CorporateGovernance/p_InformationOnConflictsOfInterestPolicy.
aspx.
2.6 Administrative Agent, Domiciliary and Corporate Agent
(i) Pursuant to an administration agency agreement dated 14 August 2013 with effect as
of 02 September 2013, entered into between RBC Investor Services Bank S.A., the
Management Company and the Company for an unlimited period of time (the
“Administration Agency Agreement”), RBC Investor Services Bank S.A. has been
appointed by the Management Company, with the approval of the Company, as the
central administration and registrar and transfer agent of the Company (the
“Administrative Agent”). As such, RBC Investor Services Bank will be responsible,
without limitation for the performance of the central administrative and registrar and
transfer agent functions required by Luxembourg Law, and, inter alia and without
limitation, for the calculation of the NAV of the Shares, the safe keeping of the register
of Shareholders, the processing of subscription, conversion and redemption orders in
respect of Shares, the maintenance of the Company's accounting records.
RBC Investor Services Bank is empowered to delegate, under its full responsibility, part of its duties as
administrative agent.
The rights and obligations of the Administrative Agent are governed by an administration agency agreement
dated 14 August 2013 with effect as of 20 September 2013, entered into between the Administrative Agent,
the Management Company and the Company for an unlimited period of time (the Administration
Agreement).
Pursuant to a Domiciliary and Corporate Agency Agreement dated 14 August 2013 with effect as of 02
September 2013, the Company has appointed RBC Investor Services Bank S.A. as its domiciliary agent and
corporate agent to maintain the relevant records of the Company and to perform other related administrative
functions.
2.7 Risk management
25
(a) The Board has delegated the risk management of the Sub-funds of the Company to the
Management Company providing risk management services and in particular, carrying out the
daily portfolio processing and risk reporting (including VaR and back testing) and providing
daily UCITS compliance reporting (based on daily VaR calculation) in relation to the Sub-
fund's portfolio.
2.8 Distributors and nominees
(a) The Company and the Management Company may enter into distribution agreement(s) to
appoint Distributor(s) to distribute Shares of different Sub-funds from time to time. Initially
the Company and the Management Company will appoint one or more Distributors on each
Sub-funds as defined in the relevant Special Sections. The Distributor(s) may appoint one or
more reputable sub-distributors at its (their) discretion.
(b) The Company and the Management Company expect that in relation to Shares to be offered
to investors the relevant Distributor(s) will offer to enter into arrangements with the relevant
investors to provide nominee services to those investors in relation to the Shares or arrange
for third party nominee service providers to provide such nominee services to the underlying
investors.
(c) All Distributors that are entitled to receive subscription monies and/or subscription,
redemption or conversion orders on behalf of the Company and nominee service providers
must be (i) professionals of the financial sector of a FATF member country which are subject
under their local regulations to anti money laundering rules equivalent to those required by
Luxembourg law or (ii) professionals established in a non-FATF member State provided they
are a subsidiary of a professional of the financial sector of a FATF member State and they are
obliged to follow anti money laundering and terrorism financing rules equivalent to those
required by Luxembourg law because of internal group policies. Whilst and to the extent that
such arrangements subsist, such underlying investors will not appear in the Register of the
Company and will have no direct right of recourse against the Company.
(d) Any Distributor or nominee service providers holding their Shares through Euroclear or
Clearstream or any other relevant clearing system as an accountholder also will not be
recognised as the registered Shareholder in the Register. The relevant nominee of Euroclear
or Clearstream or the other relevant clearing system will be recognised as the registered
Shareholder in the Register in such event, and in turn would hold the Shares for the benefit of
the relevant accountholders in accordance with the relevant arrangements.
(e) The terms and conditions of the distribution agreement(s) with arrangements to provide
nominee services will have to allow that an underlying investor who (i) has invested in the
Company through a nominee and (ii) is not a Restricted Person, may at any time, require the
transfer in his name of the Shares subscribed through the nominee. After this transfer, the
investor will receive evidence of his shareholding at the confirmation of the transfer from the
nominee.
(f) Investors may subscribe directly to the Company without having to go through Distributor(s)
or a nominee.
(g) A copy of the various agreements between the Company, the Management Company and the
Distributor(s) or nominee(s) are available at the registered office of the Company as well as
at the registered office of the Administrative Agent or of the Distributor(s)/nominee(s) during
the normal business hours on any Business Day.
(h) The Management Company and any Investment Manager or Investment Adviser may pay all
or part of their remuneration as a commission, retrocession or discount to financial
26
intermediaries intervening in the distribution and marketing of the Company’s shares. Any
such retrocession, commission or discount will be paid by the Management Company,
Investment Manager or Investment Adviser out of its own remuneration.
(i) Distributors, with regard to the distribution of certain Classes' may be entitled to a distribution
fee payable by the Company. This fee is accrued daily and paid periodically in arrears.
Distributors have the right, at their discretion to reallocate such fee, in whole or in part, to sub-
distributors.
2.9 Auditor
Ernst & Young S.A. has been appointed as the Company's auditor and will fulfil all duties prescribed
by the 2010 Act.
3. Investment Objective, Policy and Restrictions
3.1 Investment Objective
The Investment Objective of each Sub-fund is as set out in respect of that Sub-fund in the relevant
Special Section.
There can be no guarantee that the Investment Objective of any Sub-fund will be met.
3.2 Investment Policy
The Investment Policy of each Sub-fund is as set out in respect of that Sub-fund in the relevant Special
Section.
3.3 Investment Restrictions
The Company and the Sub-funds are subject to the Investment Restrictions set forth below.
The management of the assets of the Sub-funds will be undertaken within the following Investment
Restrictions. A Sub-fund may be subject to additional Investment Restrictions set out in the relevant
Special Section. In the case of any conflict, the provisions of the relevant Special Section will prevail.
Investment instruments
3.4 The Company's investments may consist solely of:
(a) Transferable Securities and Money Market Instruments admitted to official listing on a stock
exchange in an EU Member State;
(b) Transferable Securities and Money Market Instruments dealt on another Regulated Market;
(c) Transferable Securities and Money Market Instruments admitted to official listing on a stock
exchange or dealt in on another regulated market in any country of Western or Eastern Europe,
Asia, Oceania, the American continents or Africa;
(d) new issues of Transferable Securities and Money Market Instruments, provided that:
(i) the terms of issue include an undertaking that application will be made for admission
to official listing on any stock exchange or other Regulated Market referred to in
Section 3.4(a), (b) and 3.4(c) of the General Section;
(ii) such admission is secured within a year of issue;
27
(e) units of UCITS and/or other UCIs within the meaning of article 1, paragraph (2), points a) and
b) of the UCITS Directive, whether situated in an EU Member State or not, provided that:
(i) such other UCIs are authorised under laws which provide that they are subject to
supervision that is considered by the Luxembourg supervisory authority to be
equivalent to that laid down in EU law, and that cooperation between authorities is
sufficiently ensured;
(ii) the level of guaranteed protection for unitholders in such other UCIs is equivalent to
that provided for unitholders in a UCITS, and in particular that the rules on asset
segregation, borrowing, lending, and uncovered sales of Transferable Securities and
Money Market Instruments are equivalent to the requirements of the UCITS Directive;
(iii) the business of such other UCIs is reported in half-yearly and annual reports to enable
an assessment to be made of the assets and liabilities, income and operations over the
reporting period;
(iv) no more than 10% of the net assets of the UCITS or other UCI whose acquisition is
contemplated, can, according to their fund rules or constitutional documents, be
invested in aggregate in units of other UCITS or other UCIs;
(f) deposits with credit institutions which are repayable on demand or have the right to be
withdrawn, and maturing in no more than 12 months, provided that the credit institution has
its registered office in an OECD Member State or, if the registered office of the credit
institution is situated in a non-OECD Member State, provided that it is subject to prudential
rules considered by the CSSF as equivalent to those laid down in EU law;
(g) financial derivative instruments, including equivalent cash-settled instruments, dealt in on a
Regulated Market referred to in Section 3.4(a), (b) and (c) of the General Section; and/or OTC
Derivatives, provided that:
(i) the underlying consists of instruments covered by this Section 3.4, financial indices,
interest rates, foreign exchange rates or currencies, in which a Sub-fund may invest
according to its Investment Objectives as stated in the relevant Special Section;
(ii) the counterparties to OTC Derivative transactions are First Class Institutions; and
(iii) the OTC Derivatives are subject to reliable and verifiable valuation on a daily basis and
can be sold, liquidated or closed by an offsetting transaction at any time at their fair
value at the Company's initiative;
(h) Money Market Instruments other than those dealt in on a Regulated Market if the issue or
issuer of such instruments is itself regulated for the purpose of protecting investors and
savings, and provided that they are:
(i) issued or guaranteed by a central, regional or local authority or central bank of an EU
Member State, the European Central Bank, the EU or the European Investment Bank,
a non-EU Member State or, in the case of a federal State, by one of the members making
up the federation, or by a public international body to which one or more EU Member
States belong; or
(ii) issued by an undertaking, any securities of which are listed on a stock exchange or dealt
in on Regulated Markets referred to in Section 3.4(a), 3.4(b) or 3.4(c) of the General
Section; or
28
(iii) issued or guaranteed by an establishment subject to prudential supervision, in
accordance with criteria defined by EU law, or by an establishment which is subject to
and complies with prudential rules considered by the CSSF to be at least as stringent as
those laid down by EU law; or
(iv) issued by other bodies belonging to the categories approved by the CSSF provided that
investments in such instruments are subject to investor protection rules equivalent to
that laid down in the first, the second or the third indent and provided that the issuer is
a company whose capital and reserves amount to at least €10 million and which (i)
represents and publishes its annual accounts in accordance with Directive 78/660/EEC,
(ii) is an entity which, within a group of companies which includes one or several listed
companies, is dedicated to the financing of the group or (iii) is an entity which is
dedicated to the financing of securitisation vehicles which benefit from a banking
liquidity line.
3.5 However, each Sub-fund may:
(a) invest up to 10% of its net assets in Transferable Securities and Money Market Instruments
other than those referred to under Section 3.4 of the General Section; and
(b) hold liquid assets on an ancillary basis.
Risk diversification
3.6 In accordance with the principle of risk diversification, the Company is not permitted to invest more
than 10% of the net assets of a Sub-fund in Transferable Securities or Money Market Instruments of
one and the same issuer. The total value of the Transferable Securities and Money Market Instruments
in each issuer in which more than 5% of the net assets are invested, must not exceed 40% of the value
of the net assets of the respective Sub-fund. This limitation does not apply to deposits and OTC
Derivative transactions made with financial institutions subject to prudential supervision.
3.7 The Company is not permitted to invest more than 20% of the net assets of a Sub-fund in deposits
made with the same body.
3.8 Notwithstanding the individual limits laid down in Sections 3.6, 3.7 and 3.33 of the General Section,
a Sub-fund may not combine:
(a) investments in Transferable Securities or Money Market Instruments issued by,
(b) deposits made with, and/or
(c) exposures arising from OTC Derivative transactions undertaken with,
a single body in excess of 20% of its net assets.
3.9 The 10% limit set forth in Section 3.6 of the General Section can be raised to a maximum of 25% in
case of certain bonds issued by credit institutions which have their registered office in an EU Member
State and are subject by law, in that particular country, to specific public supervision designed to ensure
the protection of bondholders. In particular the funds which originate from the issue of these bonds are
to be invested, in accordance with the law, in assets which sufficiently cover the financial obligations
resulting from the issue throughout the entire life of the bonds and which are allocated preferentially
to the payment of principal and interest in the event of the issuer's failure. Furthermore, if investments
by a Sub-fund in such bonds with one and the same issuer represent more than 5% of the net assets,
the total value of these investments may not exceed 80% of the net assets of the corresponding Sub-
fund.
29
3.10 The 10% limit set forth in Section 3.6 of the General Section can be raised to a maximum of 35% for
Transferable Securities and Money Market Instruments that are issued or guaranteed by an EU
Member State or its local authorities, by another OECD Member State, or by public international
organisations of which one or more EU Member States are members.
3.11 Transferable Securities and Money Market Instruments which fall under the special ruling given in
Sections 3.9 and 3.10 of the General Section are not counted when calculating the 40% risk
diversification ceiling mentioned in Section 3.6 of the General Section.
3.12 The limits provided for in Sections 3.6 to 3.10 of the General Section may not be combined, and thus
investments in Transferable Securities or Money Market Instruments issued by the same body or in
deposits or derivative instruments with this body will under no circumstances exceed in total 35% of
the net assets of a Sub-fund.
3.13 Companies which are included in the same group for the purposes of consolidated accounts, as defined
in accordance with Directive 83/349/EEC or in accordance with recognised international accounting
rules, are regarded as a single body for the purpose of calculating the limits contained in Sections 3.6
to 3.14 of the General Section.
3.14 A Sub-fund may invest, on a cumulative basis, up to 20% of its net assets in Transferable Securities
and Money Market Instruments of the same group.
Exceptions which can be made
3.15 Without prejudice to the limits laid down in Section 3.46 of the General Section, the limits laid down
in Sections 3.6 to 3.14 of the General Section are raised to a maximum of 20% for investment in shares
and/or bonds issued by the same body if, according to the relevant Special Section, the Investment
Objective and Investment Policy of that Sub-fund is to replicate the composition of a certain stock or
debt securities index which is recognised by the CSSF, on the following basis:
(a) its composition is sufficiently diversified;
(b) the index represents an adequate benchmark for the market to which it refers;
(c) it is published in an appropriate manner.
The above 20% limit may be raised to a maximum of 35%, but only in respect of a single
body, where that proves to be justified by exceptional market conditions in particular in
Regulated Markets where certain Transferable Securities or Money Market Instruments are
highly dominant.
3.16 The Company is authorised, in accordance with the principle of risk diversification, to invest up to
100% of the net assets of a Sub-fund in Transferable Securities and Money Market Instruments from
various offerings that are issued or guaranteed by an EU Member State or its local authorities, by
another OECD Member State, or by public international organisations in which one or more EU
Member States are members. These securities must be divided into at least six different issues, with
securities from one and the same issue not exceeding 30% of the total net assets of a Sub-fund.
Investment in UCITS and/or other UCIs
3.17 A Sub-fund may acquire the units of UCITS and/or other UCIs referred to in Section 3.4(e) of the
General Section, provided that no more than 20% of its net assets are invested in units of a single
UCITS or other UCI. If a UCITS or other UCI has multiple compartments (within the meaning of
article 181 of the 2010 Act) and the assets of a compartment may only be used to satisfy the rights of
the investors relating to that compartment and the rights of those creditors whose claims have arisen
30
in connection with the setting-up, operation and liquidation of that compartment, each compartment is
considered as a separate issuer for the purposes of applying the above limit.
3.18 Investments made in units of UCIs other than UCITS may not exceed, in aggregate, 30% of the net
assets of the Sub-fund.
3.19 When a Sub-fund has acquired units of UCITS and/or other UCIs, the assets of the respective UCITS
or other UCIs do not have to be combined for the purposes of the limits laid down in Sections 3.6 to
3.14 of the General Section.
3.20 When a Sub-fund invests in the units of UCITS and/or other UCIs that are managed, directly or by
delegation, by the same management company or by any other company with which the management
company is linked by common management or control, or by a substantial direct or indirect holding,
(regarded as more than 10% of the voting rights or share capital), that management company or other
company may (i) neither charge subscription, conversion or redemption fees on account of the Sub-
fund's investment in the units of such UCITS and/or other UCIs (ii) nor any management fees
exceeding 0.25% of the proportion of the Sub-fund's net assets invested in the units of such UCITS
and/or other UCIs.
3.21 If a Sub-fund invests a substantial proportion of its assets in other UCITS and/or other UCIs that are
not managed, directly or by delegation, by the same management company or by any other company
with which the management company is linked by common management or control, or by a substantial
direct or indirect holding (regarded as more than 10% of the voting rights or share capital), the
maximum level of the management fees that may be charged both to the Sub-fund itself and to the
other UCITS and/or other UCIs in which it intends to invest, will be disclosed in the relevant Special
Section.
3.22 In the annual report of the Company it will be indicated for each Sub-fund the maximum proportion
of management fees charged both to the Sub-fund and to the UCITS and/or other UCIs in which the
Sub-fund invests.
Investments in financial derivative instruments and use of EPM techniques
3.23 The Company must employ (i) a risk-management process which enables it to monitor and measure at
any time the risk of the positions and their contribution to the overall risk profile of the portfolio and
(ii) a process for accurate and independent assessment of the value of OTC Derivatives.
3.24 Each Sub-fund will ensure that its global exposure relating to derivative instruments does not exceed
the total net value of its portfolio.
3.25 The exposure is calculated taking into account the current value of the underlying assets, the
counterparty risk, future market movements and the time available to liquidate the positions. This will
also apply to the following paragraphs.
3.26 A Sub-fund may invest, as a part of its investment policy, in financial derivative instruments provided
that the exposure to the underlying assets does not exceed in aggregate the investment limits laid down
in Sections 3.6 to 3.14. Under no circumstances will these operations cause a Sub-fund to diverge from
its investment objectives as laid down in the Prospectus and the relevant Special Section. When a Sub-
fund invests in index-based financial derivative instruments, these investments do not have to be
combined to the limits laid down in Sections 3.6 to 3.14.
3.27 When a Transferable Security or Money Market Instrument embeds a derivative, the latter must be
taken into account when complying with the requirements of Sections 3.23 to 3.41.
31
3.28 The Company's annual reports will contain, in respect of each Sub-fund that has entered into financial
derivative instruments over the relevant reporting period, details of:
the underlying exposure obtained through financial derivative instruments;
the identity of the counterparty(ies) to these financial derivative instruments;
the type and amount of collateral received to reduce counterparty risk exposure.
3.29 The Sub-funds are authorised to employ techniques and instruments relating to Transferable Securities
or Money Market Instruments subject to the following conditions:
(a) they are economically appropriate in that they are realised in a cost-effective way;
(b) they are entered into for one or more of the following specific aims:
(i) reduction of risk;
(ii) reduction of cost;
(iii) generation of additional capital or income for the relevant Sub-fund with a level of risk
which is consistent with the its risk profile and applicable risk diversification rules;
(c) their risks are adequately captured by the Company's risk management process.
The efficient portfolio management techniques (EPM Techniques) that may be employed by the Sub-
funds in accordance with Section 3.29 above include securities lending, repurchase agreements and
reverse repurchase agreements. A repurchase agreement transaction is a forward transaction at the
maturity of which a Sub-fund has the obligation to repurchase the assets sold and the buyer
(counterparty) the obligation to return the assets received under the transaction. A reverse repurchase
agreement transaction is a forward transaction at the maturity of which the seller (counterparty) has
the obligation to repurchase the assets sold and the relevant Sub-fund has the obligation to return the
assets received under the transaction.
All revenues arising from EPM Techniques, net of direct and indirect operational costs and fees, will
be returned to the Company. In particular, fees and cost may be paid to agents of the Company and
other intermediaries providing services in connection with EPM Techniques as normal compensation
of their services. Such fees may be calculated as a percentage of gross revenues earned by the fund
through the use of such techniques. information on direct and indirect operational costs and fees that
may be incurred in this respect as well as the identity of the entities to which such costs and fees are
paid – as well as any relationship they may have with the depositary, the management company or the
investment manager – will be available in the annual report of the Company.
3.30 The use of EPM Techniques by the Sub-funds is subject to the following conditions:
(a) When entering into a securities lending agreement, the Company should ensure that it is able
at any time to recall any security that has been lent out or terminate the securities lending
agreement.
(b) When entering into a reverse repurchase agreement, the Company should ensure that it is able
at any time to recall the full amount of cash or to terminate the reverse repurchase agreement
on either an accrued basis or a mark-to-market basis. When the cash is recallable at any time
on a mark-to-market basis, the mark-to-market value of the reverse repurchase agreement
should be used for the calculation of the net asset value of the relevant Sub-fund.
32
(c) When entering into a repurchase agreement, the Company should ensure that it is able at any
time to recall any securities subject to the repurchase agreement or to terminate the repurchase
agreement into which it has entered.
3.31 Fixed-term repurchase and reverse repurchase agreements that do not exceed seven days should be
considered as arrangements on terms that allow the assets to be recalled at any time by the Company.
3.32 The Company's annual report will include the following information:
(a) the exposure obtained through EPM Techniques;
(b) the identity of the counterparty(ies) to these EPM Techniques;
(c) the type and amount of collateral received by the Company to reduce counterparty exposure;
and
(d) the revenues arising from EPM Techniques for the entire reporting period together with the
direct and indirect operational costs and fees incurred.
3.33 The counterparty risk arising from OTC Derivatives and EPM Techniques may not exceed 10% of the
assets of a Sub-fund when the counterparty is a credit institution domiciled in the EU or in a country
where the CSSF considers that supervisory regulations are equivalent to those prevailing in the EU.
This limit is set at 5% in any other case.
3.34 The counterparty risk of a Sub-fund vis-à-vis a counterparty is equal to the positive mark-to-market
value of all OTC Derivatives and EPM Techniques transactions with that counterparty, provided that:
if there are legally enforceable netting arrangements in place, the risk exposure arising from
OTC Derivative and EPM Techniques transactions with the same counterparty may be netted;
and
if collateral is posted in favour of a Sub-fund and such collateral complies at all times with the
criteria set out in Section 3.35 below, the counterparty risk of such Sub-fund is reduced by the
amount of such collateral.
3.35 Collateral received by a Sub-fund must comply at all times with the following principles:
(a) Liquidity – any collateral received other than cash should be highly liquid and traded on a
regulated market or multilateral trading facility with transparent pricing in order that it can be
sold quickly at a price that is close to pre-sale valuation. Collateral received should also
comply with the acquisition limits set out in Section 3.46(b).
(b) Valuation – collateral received should be valued on at least a daily basis and assets that exhibit
high price volatility should not be accepted as collateral unless suitably conservative haircuts
are in place.
(c) Issuer credit quality – collateral received should be of high quality.
(d) Correlation – the collateral received by the Sub-fund should be issued by an entity that is
independent from the counterparty and is expected not to display a high correlation with the
performance of the counterparty.
(e) Collateral diversification (asset concentration) – collateral should be sufficiently diversified
in terms of country, markets and issuers. The criterion of sufficient diversification with respect
to issuer concentration is considered to be respected if the Sub-fund receives from a
33
counterparty of OTC Derivative or EPM Techniques transactions a basket of collateral with a
maximum exposure to a given issuer of 20% of its net asset value. When a Sub-fund is exposed
to different counterparties, the different baskets of collateral should be aggregated to calculate
the 20% limit of exposure to a single issuer. By way of derogation to the above collateral
diversification rules, a Sub-Fund may be fully collateralised in different transferable securities
and money market instruments issued or guaranteed by an EU Member State or its local
authorities, by another OECD Member State, or by public international organisations in which
one or more EU Member States are members.. In this case the Sub-Fund should receive
securities from at least six different issues, but securities from any single issue should not
account for more than 30% of the Sub-fund net asset value.
(f) Risks linked to the management of collateral, such as operational and legal risks, should be
identified, managed and mitigated by the risk management process.
(g) Collateral received should be capable of being fully enforced by the Company for the account
of the Sub-fund at any time without reference to or approval from the counterparty.
3.36 The Sub-funds will only accept the following assets as collateral:
(a) Liquid assets. Liquid assets include not only cash and short term bank certificates, but also
money market instruments such as defined within Directive 2009/65/EC. A letter of credit or
a guarantee at first-demand given by a first class credit institution not affiliated to the
counterparty are considered as equivalent to liquid assets.
(b) Bonds issued or guaranteed by a Member State of the OECD or by their local public authorities
or by supranational institutions and undertakings with EU, regional or world-wide scope.
(c) Shares or units issued by money market UCIs calculating a daily net asset value and being
assigned a rating of AAA or its equivalent.
(d) Shares or units issued by UCITS investing mainly in bonds/shares mentioned in items (e) and
(f) below.
(e) Bonds issued or guaranteed by first class issuers offering an adequate liquidity.
(f) Shares admitted to or dealt in on a regulated market of a Member State of the European Union
or on a stock exchange of a Member State of the OECD, on the condition that these shares are
included in a main index.
The Sub-funds shall make sure to receive from the counterparties of OTC Derivatives and
EPM Techniques transactions an appropriate level of collateral in order to reduce the exposure
toward those counterparties. A collateral arrangement can set (i) a minimum transfer amount,
i.e. a minimum level below which the relevant collateral is not required to be posted to the
Sub-funds, this avoids the need to transfer (or return) a small amount of collateral to reduce
operational procedures or (ii) a threshold, so that the collateral is only required to be posted if
the Sub-fund’s counterparty’s exposure exceeds an agreed level. Haircut policy
A haircut is the difference between the market value of an asset used as collateral and the
amount of the collateralized exposure. The amount of the haircut reflects perceived risk of loss
from the asset falling in value or having to be sold quickly.
Collateral will be valued, on a daily basis, using available market prices and taking into
account appropriate discounts which will be determined by the Company for each asset class
34
based on its haircut policy. The policy takes into account a variety of factors, depending on
the nature of the collateral received, such as the issuer’s credit standing, the maturity, currency,
price volatility of the assets and, where applicable, the outcome of liquidity stress tests carried
out by the fund under normal and exceptional liquidity conditions. No haircut will generally
be applied to cash collateral.
The percentage values set forth below represent the haircuts defined by the Company and are
aligned with the ones defined in the different collateral arrangements entered into on behalf of
the Sub-funds. The Company reserves the right to vary the haircuts to reflect future variations
of the collateral policy.
Assets received as collateral Haircut applied
Cash & short term bank certificates (currency of the collateralized exposure) Minimum 2%
Cash & short term bank certificates (GBP, USD, EUR other than the currency of the
collateralized exposure)
Minimum 5%
Investment Grade (A-rated and above) bonds issued or guaranteed by a Member State
of the OECD or by their local public authorities or by supranational institutions and
undertakings with EU, with a duration up to 5 years.
Minimum 5%
Investment Grade (A-rated and above) bonds issued or guaranteed by a Member State
of the OECD or by their local public authorities or by supranational institutions and
undertakings with EU, with a duration greater than 5 years.
Minimum 10%
Investment Grade (A-rated and above) corporate bonds with a duration up to 10 years
Minimum 15%
Money market funds with daily liquidity (UCITS only) Minimum 5%
Shares (only members of large capitalization OECD countries indices) Minimum 20%
3.37 For the purpose of Section 3.35 above, all assets received by a Sub-fund in the context of EPM
Techniques should be considered as collateral.
3.38 Non-cash collateral received by a Sub-fund may not be sold, re-invested or pledged.
3.39 Cash collateral received by a Sub-fund can only be:
(a) placed on deposit with credit institutions which either have their registered office in an EU
Member State or are subject to prudential rules considered by the CSSF as equivalent to those
laid down in Community law;
(b) invested in high-quality government bonds;
(c) used for the purpose of reverse repo transactions provided the transactions are with credit
institutions subject to prudential supervision and the Company is able to recall at any time the
full amount of cash on accrued basis;
35
(d) invested in Short-Term Money Market Funds as defined in the ESMA Guidelines 2014/1103
on a Common Definition of European Money Market Funds.
The risks that may arise from the reinvestment of the cash collateral received by a Sub-fund into the
categories of assets described in this Section 3.39 are set out in Section 19.
3.40 Collateral posted in favour of a Sub-fund under a title transfer arrangement should be held by the
Depositary or one of its correspondents or sub-custodians. Collateral posted in favour of a Sub-fund
under a security interest arrangement (eg, a pledge) can be held by a third party custodian which is
subject to prudential supervision, and which is unrelated to the provider of the collateral.
3.41 The collateral eligibility requirements set out in Section 3.35 above stem from the ESMA Guidelines
2014/937.
3.42 The above provisions apply subject to any further guidelines issued from time to time by ESMA
amending and/or supplementing ESMA Guidelines 2014/937 and/or any additional guidance issued
from time to time by the regulatory authority in relation to the above.
Tolerances and multiple compartment issuers
3.43 If, because of reasons beyond the control of the Company or the exercising of subscription rights, the
limits mentioned in this Section 3 of the General Section are exceeded, the Company must have as a
priority objective in its sale transactions to reduce these positions within the prescribed limits, taking
into account the best interests of the Shareholders.
3.44 Provided that they continue to observe the principles of risk diversification, newly established Sub-
funds may deviate from the limits mentioned under Sections 3.6 to 3.20 of the General Section for a
period of six months following the date of their initial launch.
3.45 If an issuer of Eligible Investment is a legal entity with multiple compartments and the assets of a
compartment may only be used to satisfy the rights of the investors relating to that compartment and
the rights of those creditors whose claims have arisen in connection with the setting-up, operation and
liquidation of that compartment, each compartment is considered as a separate issuer for the purposes
of applying the limits set forth under Sections 3.6 to 3.14, 3.15, 3.16 and 3.17 to 3.22 of the General
Section.
Investment prohibitions
3.46 The Company is prohibited from:
(a) acquiring equities with voting rights that would enable the Company to exert a significant
influence on the management of the issuer in question;
(b) acquiring more than:
(i) 10% of the non-voting equities of one and the same issuer;
(ii) 10% of the debt securities issued by one and the same issuer;
(iii) 10% of the Money Market Instruments issued by one and the same issuer; or
(iv) 25% of the units of one and the same UCITS and/or other UCI.
The limits laid down in the second, third and fourth indents may be disregarded at the
time of acquisition if at that time the gross amount of the debt securities or of the
36
Money Market Instruments, or the net amount of the securities in issue, cannot be
calculated.
Transferable Securities and Money Market Instruments which, in accordance with
article 48, paragraph 3 of the 2010 Act are issued or guaranteed by an EU Member
State or its local authorities, by another OECD Member State or which are issued by
public international organisations of which one or more EU Member States are
members are exempted from the above limits.
(c) selling Transferable Securities, Money Market Instruments and other Eligible Investments
mentioned under sub-paragraphs (e), (g) and (h) of Section 3.4 of the General Section short;
(d) acquiring precious metals or related certificates;
(e) investing in real estate and purchasing or selling commodities or commodities contracts;
(f) borrowing on behalf of a particular Sub-fund, unless:
(i) the borrowing is in the form of a back-to-back loan for the purchase of foreign currency;
(ii) the loan is only temporary and does not exceed 10% of the net assets of the Sub-fund
in question;
(g) granting credits or acting as guarantor for third parties. This limitation does not refer to the
purchase of Transferable Securities, Money Market Instruments and other Eligible
Investments mentioned under sub-paragraphs (e), (g) and (h) of Section 3.4 of the General
Section that are not fully paid up.
Cross-investments between Sub-funds
3.47 A Sub-fund (the Cross-investing Sub-fund) may invest in one or more other Sub-funds. Any
acquisition of shares of another Sub-fund (the Target Sub-fund) by the Cross-investing Sub-fund is
subject to the following conditions:
(a) the Target Sub-fund may not invest in the Cross-investing Sub-fund;
(b) the Target Sub-fund may not invest more than 10% of its net assets in UCITS (including other
Sub-funds) or other UCIs referred to in Section 3.4(e) of the General Section;
(c) the voting rights attached to the shares of the Target Sub-fund are suspended during the
investment by the Cross-investing Sub-fund;
(d) the value of the share of the Target Sub-fund held by the Cross-investing Sub-fund are not
taken into account for the purpose of assessing the compliance with the EUR1,250,000
minimum capital requirement; and
(e) duplication of management, subscription or redemption fees is prohibited.
4. Co-management
4.1 Subject to the general provisions of the Articles and anything to the contrary in the relevant Special
Section, the Board and the Management Company may choose to co-manage the assets of certain Sub-
funds on a pooled basis for the purposes of efficient portfolio management. In these cases, assets of
the Sub-funds participating in the co-management process will be managed according to a common
37
investment objective and will be referred to as a "pool". These pools, however, are used solely for
internal management efficiency purposes or to reduce management costs.
4.2 The pools do not constitute separate legal entities and are not directly accessible to Shareholders. Cash,
or other assets, may be allocated from one or more Sub-funds into one or more of the pools established
by the Company. Further allocations may be made, from time to time, thereafter. Transfers from the
pool(s) back to the Sub-funds may only be made up to the amount of that Sub-fund's participation in
the pool(s).
4.3 The proportion of any Sub-fund's participation in a particular pool will be measured by reference to its
initial allocation of cash and/or other assets to such a pool and, on an ongoing basis, according to
adjustments made for further allocations or withdrawals.
4.4 The entitlement of each Sub-fund participating in the pool, to the co-managed assets applies
proportionally to each and every single asset of such pool.
4.5 Where the Company incurs a liability relating to any asset of a particular pool or to any action taken
in connection with an asset of a particular pool, such liability is allocated to the relevant pool. Assets
or liabilities of the Company which cannot be attributed to a particular pool, are allocated to the Sub-
fund they belong or relate to. Assets or expenses which are not directly attributable to a particular Sub-
fund are allocated among the various Sub-funds pro rata, in proportion to the Net Asset Value of each
Sub-fund.
4.6 Upon dissolution of the pool, the pool's assets will be allocated to the Sub-fund(s) in proportion to
its/their participation in the pool.
4.7 Dividends, interest, and other distributions of an income nature earned in respect of the assets of a
particular pool will be immediately credited to the Sub-funds in proportion to its respective
participation in the pool at the time such income is recorded.
4.8 Expenses directly attributable to a particular pool will be recorded as a charge to that pool and, where
applicable, will be allocated to the Sub-funds in proportion to their respective participation in the pool
at the time such expense is incurred. Expenses, that are not attributable to a particular pool, will be
charged to the relevant Sub-fund(s).
4.9 In the books and accounts of the Company the assets and liabilities of a Sub-fund, whether participating
or not in a pool, will, at all times, be identified or identifiable as an asset or liability of the Sub-fund
concerned including, as the case may be, between two accounting periods a proportionate entitlement
of a Sub-fund to a given asset. Accordingly such assets can, at any time, be segregated. On the
Depositary's records for the Sub-fund such assets and liabilities will also be identified as a given Sub-
fund's assets and liabilities and, accordingly, segregated on the Depositary's books.
5. Description of the Shares
5.1 Shares will be issued in registered form only. Shares in bearer form have not been issued and will not
be issued; therefore the provisions of the 2014 Act are not applicable. The entry into the register of
Shareholders is conclusive evidence of ownership. Certificates representing Shares will be issued only
upon request and at the Company's discretion. Fractions of Shares will be issued up to three decimals.
The Shares confer no preferential subscription rights at the time of the issue of new Shares.
5.2 The register of the Shareholders will be kept by the Administrative Agent on behalf of the Company.
The register will contain the name of each owner of registered Shares, his/her/its residence or elected
domicile as indicated to the Company and the number and Class(es) of Shares held by his/her/it and
the transfer of Shares and the dates of such transfers.
38
5.3 Unless otherwise provided for in the relevant Special Section, the Company will also have the right to
accept subscriptions through contributions in kind of assets to a Sub-fund in lieu of cash in accordance
with Section 6.16 below.
5.4 For each Sub-fund, the Directors or the person duly appointed by it or the Management Company may,
in respect of Shares in one or several Class(es) if any, decide to close subscriptions temporarily or
definitively, including those arising from the conversion of Shares of another Class or another Sub-
fund.
6. Subscription for Shares
6.1 During the Initial Offering Period or on the Initial Offering Date or on the Class Launch Date, the
Company is offering the Shares under the terms and conditions as set forth in the relevant Special
Section. The Company may offer Shares in one or several Sub-funds or in one or more Classes in each
Sub-fund. If so provided for in a Special Section, the Board or the person duly appointed by it may
extend the Initial Offering Period and/or postpone the Launch Date subject to the terms of the relevant
Special Section.
6.2 After the Initial Offering Period, the Initial Offering Date or the Class Launch Date, the Company may
offer Shares of each existing Class in each existing Sub-fund on any day that is a Transaction Day, as
stipulated in the relevant Special Section. The Company may decide that for a particular Class or Sub-
fund no further Shares will be issued after the Initial Offering Period or Initial Offering Date (as will
be set forth in the relevant Special Section). However, the Board or the person duly appointed by it
reserves the right to authorise at any time and without notice the issue and sale of Shares for Classes
or Sub-funds that were previously closed for further subscriptions. Such decision will be made by the
Board or the person duly appointed by it with due regard to the interest of the existing Shareholders in
the relevant Class or Sub-fund.
After the initial offer period the relevant class of Shares will be available for subscription at the Offer
Price for each Transaction Day. The offering price per Share of the relevant class of Shares (the "Offer
Price") is the total of (i) the Net Asset Value per Share of this class of Shares for the Transaction Day
plus (ii) the subscription charge as stated for each Sub-Fund individually in the relevant Special Section
to the Prospectus. A subscriber may also be required to pay an additional amount as an Equalisation
Credit or Dilution Levy, the rate of which is stipulated in the relevant Special Section to the Prospectus.
6.3 The Board may in its discretion decide to cancel the offering of a Sub-fund. The Board or the person
duly appointed by it may also decide to cancel the offering of a new Class of Shares. In such case,
investors having made an application for subscription will be duly informed and any subscription
monies already paid will be returned. For the avoidance of doubt, no interest will be payable on such
amount prior to their return to the relevant investors.
6.4 Shareholders or prospective investors may subscribe for a Class in a Sub-fund at a subscription price
per Share equal to:
(a) the Initial Subscription Price where the subscription relates to the Initial Offering Period, the
Initial Offering Date or the Class Launch Date; or
(b) the Net Asset Value per Share as of the Transaction Day on which the subscription is effected
where the subscription relates to a subsequent offering (other than the Initial Offering Period,
the Initial Offering Date or the Class Launch Date) of Shares of an existing Class in an existing
Sub-fund.
If an investor wants to subscribe Shares, a Subscription Fee and a Dilution Levy may be added
to the subscription price to be paid by the investor. The applicable Subscription Fee and
39
Dilution Levy will be stipulated in the relevant Special Section. The Subscription Fee will be
payable to the Company, the Management Company or the Distributor, unless otherwise
specified in respect of a Sub-fund in the relevant Special Section.
Subscription procedure
6.5 After the end of the Initial Offering Period, the Initial Offering Date or the Class Launch Date,
subscriptions may be made only by investors who are not Restricted Persons by:
(a) submitting a written subscription request by mail to the Administrative Agent or Distributor(s)
to be received by the Administrative Agent or a Distributor by 3:00 p.m. (Luxembourg time)
(the Subscription Cut-Off Time) on the relevant Transaction Day at the latest (unless another
Subscription Cut-Off Time is specified in respect of a Sub-fund in the relevant Special
Section). Subscription requests (i) from Institutional Investors or (ii) through Distributor(s),
sub-distributor(s) or nominees may also be submitted by swift or fax. Subscription orders for
Shares received by the Administrative Agent or Distributor(s) on a Transaction Day prior to
the relevant Subscription Cut-Off Time, will be processed on the first NAV Calculation Day
following such Transaction Day on the basis of the Net Asset Value per Share calculated on
such NAV Calculation Day. Any applications received after the Subscription Cut-Off Time
on the relevant Transaction Day will be deferred to the next Transaction Day and will be dealt
with on the basis of the Net Asset Value per Share calculated on the NAV Calculation Day
immediately following such next Transaction Day;
(b) delivering to the account of the Depositary cleared funds for the full amount of the subscription
price (plus any Subscription Fee and Dilution Levy) of the Shares being subscribed for
pursuant to the subscription request, (i) with respect to subscriptions from Institutional
Investors, within 3 Business Days following the relevant Transaction Day, (ii) with respect to
subscriptions through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days
following the relevant Transaction Day and (iii) with respect to subscriptions directly to the
Company without going through Distributor(s), sub-distributor(s) or a nominee from investors
other than Institutional Investors, on the relevant Transaction Day prior to the relevant
Subscription Cut-Off Time (unless otherwise specified in respect of a Sub-fund in the relevant
Special Section).
6.6 If the Depositary does not receive the funds in time the investor will be liable for the costs of late or
non-payment in which the case the Board and the Management Company will have the power to
redeem all or part of the investor's holding of Shares in the Company in order to meet such costs. In
circumstances where it is not practical or feasible to recoup a loss from an applicant for Shares, any
losses incurred by the Company due to late or non-payment of the subscription proceeds in respect of
subscription applications received may be borne by the Company.
6.7 Subscribers for Shares must make payment in the Reference Currency or an Authorised Payment
Currency of the relevant Sub-fund or Class. Subscription monies received in another currency than the
Reference Currency (i.e., an Authorised Payment Currency) will be exchanged by the Depositary on
behalf of the investor at normal banking rates. Any such currency transaction will be effected by the
Depositary at the investor's risk and cost. Such currency exchange transactions may delay any
transaction in Shares.
6.8 Subscribers for Shares are to indicate the allocation of the subscription monies among one or more of
the Sub-funds and/or Classes offered by the Company. Subscription requests are irrevocable, unless
in the period during which the calculation of the Net Asset Value is suspended in accordance with
Section 13 of the General Section.
40
6.9 In the event that the subscription order is incomplete (i.e., all requested papers are not received by the
Administrative Agent or a Distributor by the relevant deadline set out above) the subscription order
will be rejected and a new subscription order will have to be submitted.
6.10 The applicable Minimum Subscription Amount and Minimum Subsequent Subscription Amount may
be waived or varied on a case-by-case basis, by the Company, the person duly appointed by it or the
Management Company.
6.11 In the event that the Company or the Management Company decides to reject any application to
subscribe for Shares the monies transferred by a relevant applicant will be returned to the prospective
investor without undue delay (unless otherwise provided for by law or regulations).
6.12 The number of Shares issued to a subscriber or Shareholder in connection with the foregoing
procedures will be equal to the subscription monies provided by the subscriber or Shareholder divided
by:
(a) the Initial Subscription Price, in relation to subscriptions made in connection with an Initial
Offering Period, an Initial Offering Date or a Class Launch Date; or
(b) the Net Asset Value per Share of the relevant Class and in the relevant Sub-fund as of the
relevant Transaction Day.
6.13 With regard to the Initial Offering Period or Initial Offering Date, Shares will be issued on the Launch
Date. With regards to the Class Launch Date, Shares will be issued on the Class Launch Date.
6.14 The Company will recognise rights to fractions of Shares up to three decimal places, rounded up or
down to the nearest decimal point. Any purchases of Shares will be subject to the ownership
restrictions set forth below. Fractional Shares shall have no right to vote (except to the extent their
number is so that they represent a whole Share, in which case, they confer a voting right) but shall
have the right to participate pro rata in distributions and allocation of liquidation proceeds.
Ownership Restrictions
6.15 A person who is a Restricted Person may not invest in the Company. The Shares have not been
registered under the US Securities Act and the Company has not been registered under the Investment
Company Act. The Shares may not be offered, sold, transferred or delivered, directly or indirectly, in
the United States of America, its territories or possessions or to US Persons (as defined herein) except
to certain qualified US institutions in reliance on certain exemptions from the registration requirements
of the US Securities Act and with the consent of the Company. Neither the Shares nor any interest
therein may be beneficially owned by any other US Person. The sale and transfer of Shares to US
Persons is restricted and the Company may repurchase Shares held by a US Person or refuse to register
any transfer to a US Person as it deems appropriate to assure compliance with the US Securities Act.
Subscription in kind
6.16 At the entire discretion of the Board, Shares may be issued against contributions of transferable
securities or other eligible assets to the Sub-funds provided that these assets are Eligible Investments
and the contributions comply with the investment policies and restrictions laid out in the Prospectus
and have a value equal to the issue price of the Shares concerned. The assets contributed to the Sub-
fund, as described above, will be valued separately in a special report of the Auditor. These
contributions in kind of assets are not subject to brokerage costs. The Board will only have recourse
to this possibility (i) at the request of the relevant investor and (ii) if the transfer does not negatively
affect current Shareholders. All costs related to a contribution in kind will be paid for by the Sub-fund
concerned provided that they are lower than the brokerage costs which the Sub-fund would have paid
if the assets concerned had been acquired on the market. If the costs relating to the contribution in kind
41
are higher than the brokerage costs which the Sub-fund concerned would have paid if the assets
concerned had been acquired on the market, the exceeding portion thereof will be supported by the
subscriber.
Institutional Investors
6.17 The sale of Shares of certain Sub-funds or Classes may be restricted to institutional investors within
the meaning of Article 174 of the 2010 Act (Institutional Investors) and the Company will not issue or
give effect to any transfer of Shares of such Sub-funds or Classes to any investor who may not be
considered as an Institutional Investor. The Company may, at its discretion, delay the acceptance of
any subscription for shares of a Sub-fund or Class restricted to Institutional Investors until such date
as it has received sufficient evidence on the qualification of the investor as an Institutional Investor. If
it appears at any time that a holder of Shares of a Sub-fund or Class restricted to Institutional Investors
is not an Institutional Investor, the Company will, at its discretion, either redeem the relevant shares
in accordance with Section 8 of this General Section or convert such Shares into Shares of a Sub-fund
or Class which is not restricted to Institutional Investors (provided there exists such a Sub-fund or
Class with similar characteristics) and which is essentially identical to the restricted Sub-fund or Class
in terms of its investment object (but, for avoidance of doubt, not necessarily in terms of the fees and
expenses payable by such Sub-fund or Class), unless such holding is the result of an error of the
Company, the Management Company or their agents, and notify the relevant Shareholder of such
conversion.
6.18 Considering the qualification of a subscriber or a transferee as Institutional Investor, the Company will
have due regard to the guidelines or recommendations (if any) of the competent supervisory
authorities.
6.19 Institutional Investors subscribing in their own name, but on behalf of a third party, may be required
to certify that such subscription is made either on behalf of an Institutional Investor or on behalf of a
Retail Investor provided in the latter case that the Institutional Investor is acting within the framework
of a discretionary management mandate and that the Retail Investor has no right to lay a claim against
the Company or the Management Company for direct ownership of the Shares.
7. Conversion of Shares
7.1 Unless otherwise stated in the relevant Special Section, Shareholders are allowed to convert all, or
part, of the Shares of a given Class into Shares of the same Class of another Sub-fund. However, the
right to convert Shares is subject to compliance with any condition (including any Minimum
Subscription Amounts and eligibility requirements) applicable to the Class into which conversion is
to be effected. Therefore, if, as a result of a conversion, the value of a Shareholder's holding in the new
Class would be less than the applicable Minimum Subscription Amount, the Board or the person duly
appointed by it may decide not to accept the request for conversion of the Shares. In addition, if, as a
result of a conversion, the value of a Shareholder's holding in the original Class would become less
than the relevant Minimum Holding Amount as stipulated in the relevant Special Section, the
Shareholder may be deemed (if the Board or the person duly appointed by it so decides) to have
requested the conversion of all of his Shares. Shareholders are not allowed to convert all, or part, of
their Shares into Shares of a Sub-fund which is closed for further subscriptions after the Initial Offering
Period or Initial Offering Date (as will be set forth in the relevant Special Section).
7.2 If the criteria to become a Shareholder of such other Class and/or such other Sub-fund are fulfilled, the
Shareholder will make an application to convert Shares by sending a written request by swift or fax
for conversion to the Distributor or the Administrative Agent. Shares may be converted at the request
of the Shareholders on any day that is a Transaction Day. The conversion request must be received by
the Administrative Agent at the time specified in the relevant Special Section on the relevant
Transaction Day. Conversion requests received after this deadline will be deemed received at the next
forthcoming Transaction Day and will processed on the basis of the Net Asset Value per Share as of
42
the first Transaction Day after the relevant Transaction. The conversion request must state the number
of Shares of the relevant Classes in the relevant Sub-fund, which the Shareholder wishes to convert.
7.3 If any application for conversion is received in respect of any one Transaction Day (the First
Transaction Day) which either singly or when aggregated with other applications so received
(including redemption requests), is more than 10% of the total net assets of the relevant Sub-fund, the
Company reserves the right in its sole and absolute discretion (and taking into account the best interests
of the remaining Shareholders) to scale down pro rata each application with respect to such First
Transaction Day so that not more than 10% of the total net assets of the Sub-fund be redeemed or
converted on such First Transaction Day. To the extent that any application is not given full effect on
such First Transaction Day by virtue of the exercise of the power to prorate applications, it will be
treated with respect to the unsatisfied balance thereof as if a further request had been made by the
Shareholder in respect of the next Transaction Day and, if necessary, subsequent Transaction Days
with a maximum of 7 Transaction Days. With respect to any application received in respect of the First
Transaction Day, to the extent that subsequent applications will be received in respect of following
Transaction Days, such later applications will be postponed in priority to the satisfaction of
applications relating to the First Transaction Day, but subject thereto will be dealt with as set out in
the preceding sentence.
7.4 A Conversion Fee, and if applicable a Dilution Levy the rate of which is stipulated in the Special
Section of the relevant Sub-Fund, in favour of Sub-fund from which the Shares are converted, of up
to 1% of the Net Asset Value of the Shares of the relevant Class of the relevant new Sub-fund to be
issued may be levied to cover conversion costs. The same rate of Conversion Fee will be applied to all
conversion requests (deemed) received on the same Transaction Day.
7.5 Conversion of Shares will be effected on the first NAV Calculation Day after the relevant Transaction
Day, by the simultaneous:
(a) redemption of the number of Shares of the relevant Class in the relevant Sub-fund specified
in the conversion request at the Net Asset Value per Share of the relevant Class in the relevant
Sub-fund; and
(b) issue of Shares on that Transaction Day in the new Sub-fund or Class, into which the original
Shares are to be converted, at the Net Asset Value per Share for Shares of the relevant Class
in the (new) Sub-fund.
7.6 Subject to any currency conversion (if applicable) the proceeds resulting from the redemption of the
original Shares will be applied immediately as the subscription monies for the Shares in the new Class
or Sub-fund into which the original Shares are converted.
7.7 Where Shares denominated in one currency are converted into Shares denominated in another
currency, the number of such Shares to be issued will be calculated by converting the proceeds
resulting from the redemption of the Shares into the currency in which the Shares to be issued are
denominated. The exchange rate for such currency conversion will be calculated by the Depositary in
accordance with the rules laid down in Section 12 of the General Section.
7.8 If conversion requests would result in a residual holding in any one Sub-fund or Class of less than the
Minimum Net Asset Value applicable, the Company reserves the right to compulsory redeem the
residual Shares in that Sub-fund or Class at the relevant redemption price and make payment of the
proceeds thereof to the Shareholders.
43
8. Redemption of Shares
Timing, form of redemption request
8.1 Shares in a Sub-fund may be redeemed at the request of the Shareholders on any day that is a
Transaction Day. Redemption requests must be sent in writing by mail to the Distributor(s) or the
Administrative Agent or such other place as the Company or the Management Company may advise.
Redemption requests (i) from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or
nominees may also be submitted by swift or fax. Redemption requests must be received by the
Distributor or the Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off
Time) on the Transaction Day prior to the relevant redemption deadline as specified above (unless
another Redemption Cut-Off Time is specified in respect of a Sub-fund in the relevant Special
Section). Redemption requests received after the Redemption Cut-Off Time will be deemed received
at the next forthcoming Transaction Day and will be processed on the basis of the Net Asset Value per
Share as of the first NAV Calculation Day after the relevant Transaction Day.
8.2 The Board, the Management Company, the Administrative Agent and the Distributor(s) will ensure
that the relevant redemption deadline for requests for redemption as indicated in the Special Section
of each Sub-fund are strictly complied with and will therefore take all adequate measures to prevent
practices known as "Late Trading".
8.3 Requests for redemption must be for either a number of Shares or an amount denominated in the
Reference Currency or an Authorised Payment Currency of the Class of the Sub-fund. Redemption
requests must be addressed to the Administrative Agent or the Distributor. Redemption requests will
not be accepted by telephone or telex. Redemption requests are irrevocable (except during any period
where the determination of the Net Asset Value, the issue, redemption and conversion of Shares is
suspended) and proceeds of the redemption will be remitted to the account indicated by the Shareholder
in its redemption request. The Company reserves the right not to redeem any Shares if it has not been
provided with evidence satisfactory to the Company that the redemption request was made by a
Shareholder of the Company. Failure to provide appropriate documentation to the Administrative
Agent may result in the withholding of redemption proceeds.
In case of reimbursement it shall be assumed that Shares first subscribed are first redeemed.
Redemption Price
8.4 A Shareholder who redeems his Shares will receive an amount per Share redeemed equal to the Net
Asset Value per Share as of the applicable Transaction Day for the relevant Class in the relevant Sub-
fund, less, as the case may be, the Redemption Fee and the Dilution Levy, as stipulated in the relevant
Special Section and any tax or duty imposed on the redemption of the Shares), plus a return of any
unused Equalisation Credit or minus the payment of any adjustments for the performance fee
(Performance Fee redemption) as stipulated in the relevant Special Section.
8.5 If a Shareholder wants to redeem Shares of the Company, a Redemption Fee and a Dilution Levy may
be levied on the amount to be paid to the Shareholder. The applicable Redemption Fee and Dilution
Levy will be stipulated in the relevant Special Section. The Redemption Fee will be payable to the
Company or the Distributor, unless otherwise specified in respect of a Sub-fund in the relevant Special
Section. For the avoidance of doubt, the Redemption Fee is calculated on the redemption price of the
Shares.
Payment of the redemption price
8.6 Payment of the redemption proceeds will be made generally within 3 Business Days following the
relevant Transaction Day (unless otherwise specified in respect of a Sub-fund in the relevant Special
Section). Where a Shareholder redeems Shares that he has not paid for within the required subscription
settlement period, in circumstances where the redemption proceeds would exceed the subscription
44
amount that he owes, the Company will be entitled to retain such excess for the benefit of the
Company.
Minimum Holding Amount - Minimum Net Asset Value
8.7 If as a result of a redemption, the value of a Shareholder's holding would become less than the relevant
Minimum Holding Amount as stipulated in the relevant Special Section, the Shareholder may be
deemed (if the Board or the person duly appointed by it so decides) to have requested the redemption
of all his Shares.
8.8 If redemption requests would result in a residual holding in any one Sub-fund or Class of less than the
Minimum Net Asset Value applicable, the Company reserves the right to compulsory redeem the
residual Shares in that Sub-fund or Class at the relevant redemption price and make payment of the
proceeds thereof to the Shareholder.
Suspension of redemption
8.9 Redemption of Shares may be suspended for certain periods of time as described under Section 13 of
the General Section.
Redemption applications higher than 10% of the total net assets of a relevant Sub-fund
8.10 If any application for redemption is received in respect of the First Transaction Day which either singly
or when aggregated with other applications so received (including conversion requests), is more than
10% of the total net assets of the relevant Sub-fund, the Company reserves the right in its sole and
absolute discretion (and taking into account the best interests of the remaining Shareholders) to scale
down pro rata each application with respect to such First Transaction Day so that not more than 10%
of the total net assets of the Sub-fund be redeemed or converted on such First Transaction Day. To the
extent that any application is not given full effect on such First Transaction Day by virtue of the
exercise of the power to prorate applications, it will be treated with respect to the unsatisfied balance
thereof as if a further request had been made by the Shareholder in respect of the next Transaction Day
and, if necessary, subsequent Transaction Days with a maximum of 7 Transaction Days. With respect
to any application received in respect of the First Transaction Day, to the extent that subsequent
applications will be received in respect of following Transaction Days, such later applications will be
postponed in priority to the satisfaction of applications relating to the First Transaction Day, but subject
thereto will be dealt with as set out in the preceding sentence.
Redemption in-kind
8.11 The Company may, at the request of a Shareholder, agree to make, in whole or in part, a distribution
in-kind of securities of the Sub-fund to that Shareholder in lieu of paying to that Shareholder
redemption proceeds in cash. The Company will agree to do so if it determines that such a transaction
would not be detrimental to the best interests of the remaining Shareholders of the relevant Sub-fund.
Such redemption will be effected at the Net Asset Value per Share of the relevant Class of the Sub-
fund which the Shareholder is redeeming, and thus will constitute a pro rata portion of the Sub-fund's
assets attributable in that Class in terms of value. The assets to be transferred to such Shareholder will
be determined by the Company and the Depositary, with regard to the practicality of transferring the
assets and to the interests of the Sub-fund and continuing participants therein and to the Shareholder.
Such a Shareholder may incur brokerage and/or local tax charges on any transfer or sale of securities
so received in satisfaction of redemption. The net proceeds from this sale by the redeeming
Shareholder of such securities may be more or less than the corresponding redemption price of Shares
in the relevant Sub-fund due to market conditions and/or differences in the prices used for the purposes
of such sale or transfer and the calculation of the Net Asset Value of Shares of the Sub-fund. The
selection, valuation and transfer of assets will be subject to the review and approval of the Auditor of
the Company.
45
8.12 Any costs incurred in connection with a redemption in-kind will be borne by the relevant Shareholder.
Compulsory redemptions by the Company
8.13 The Company may redeem Shares of any Shareholder if the Board or the Management Company,
whether on its own initiative or at the initiative of a Distributor, determines that:
(a) any of the representations given by the Shareholder to the Company or the Management
Company were not true and accurate or have ceased to be true and accurate; or
(b) the Shareholder is or becomes a Restricted Person; or
(c) that the continuing ownership of Shares by the Shareholder would cause an undue risk of
adverse tax consequences to the Company or any of its Shareholders; or
(d) the continuing ownership of Shares by such Shareholder may be prejudicial to the Company
or any of its Shareholders; or
(e) such redemption is necessary for performance fee equalisation purposes as set out in the
relevant Special Section;
(f) further to the satisfaction of a redemption request received by a Shareholder, the number or
aggregate amount of Shares of the relevant Class held by this Shareholder is less than the
Minimum Holding Amount.
9. Restrictions on Transfer
9.1 All transfers of Shares will be effected by a transfer in writing in any usual or common form or any
other form approved by the Company and every form of transfer will state the full name and address
of the transferor and the transferee. The instrument of transfer of a Share will be signed by or on behalf
of the transferor. The transferor will be deemed to remain the holder of the Share until the name of the
transferee is entered on the Share register in respect thereof. The Company may decline to register any
transfer of Share if, in consequence of such transfer, the value of the holding of the transferor or
transferee does not meet the minimum subscription or holding levels of the relevant Share Class or
Sub-fund as set out in this Prospectus or the relevant Special Section. The registration of transfer may
be suspended at such times and for such periods as the Company may from time to time determine,
provided, however, that such registration will not be suspended for more than five (5) days in any
calendar year. The Company may decline to register any transfer of Shares unless the original
instruments of transfer, and such other documents that the Company may require are deposited at the
registered office of the Company or at such other place as the Company may reasonably require,
together with such other evidence as the Company may reasonably require to show the right of the
transferor to make the transfer and to verify the identity of the transferee. Such evidence may include
a declaration as to whether the proposed transferee (i) is a US Person or acting for or on behalf of a
US Person, (ii) is a Restricted Person or acting for or on behalf of a Restricted Person or (iii) does
qualify as Institutional Investor.
9.2 The Company may decline to register a transfer of Shares:
(a) if in the opinion of the Company, the transfer will be unlawful or will result or be likely to
result in any adverse regulatory, tax or fiscal consequences to the Company or its
Shareholders; or
(b) if the transferee is a US Person or is acting for or on behalf of a US Person; or
(c) if the transferee is a Restricted Person or is acting for or on behalf of a Restricted Person; or
46
(d) in relation to Classes reserved for subscription by Institutional Investors, if the transferee is
not an Institutional Investor; or
(e) in circumstances as set out in Section 11.2 of this General Section; or
(f) if in the opinion of the Company, the transfer of the Shares would lead to the Shares being
registered in a depositary or clearing system in which the Shares could be further transferred
otherwise than in accordance with the terms of this Prospectus or the Articles.
10. Anti-money laundering and terrorist financing requirements
10.1 Measures aimed towards the prevention of money laundering as provided by Luxembourg Law and
the regulations as issued by the CSSF are the responsibility of the Company.
10.2 These measures may require the Administrative Agent to request verification of the identity of any
prospective investor. By way of example, an individual may be required to produce a copy of his
passport or identification card duly certified by a competent authority (e.g. embassy, consulate, notary,
police officer, solicitor, financial institution domiciled in a country imposing equivalent identification
requirements or any other competent authority. In the case of corporate applicants, this may require,
amongst others, production of a certified copy of the certificate of incorporation (and any change of
name) and investor's memorandum and articles of association (or equivalent), a recent list of its
shareholders showing a recent stake in its capital, printed on the letterhead of the investor duly dated
and signed, an authorised signature list and an excerpt of the trade register. It should be noted that the
above list is not exhaustive and that the investors may be required to provide further information to
the Administrative Agent in order to ensure the identification of the final beneficial owner of the
Shares.
10.3 Until satisfactory proof of identity is provided by potential investors or transferees as determined by
the Administrative Agent, it reserves the right to withhold issue or approval of registration of transfers
of Shares. Similarly, redemption proceeds will not be paid unless compliance with these requirements
has been made in full. In any such event, the Administrative Agent will not be liable for any interest,
costs or compensation.
10.4 In case of a delay or failure to provide satisfactory proof of identity, the Administrative Agent may
take such action as it thinks fit.
10.5 These identification requirements may be waived by the Administrative Agent in the following
circumstances:
(a) in the case of a subscription through a financial intermediary which is supervised by a
regulatory authority which imposes an investors' or transferees' identification obligation
equivalent to that required under Luxembourg Law for the prevention of money laundering
and to which the financial intermediary is subject;
(b) in the case of a subscription through a financial intermediary whose parent is supervised by a
regulatory authority which imposes an investors' or transferees' identification obligation
equivalent to that required under Luxembourg Law for the prevention of money laundering
and where the law applicable to the parent or the group policy imposes an equivalent on its
subsidiaries or branches.
47
11. Market Timing and Late Trading
11.1 Prospective investors and Shareholders should note that the Company may reject or cancel any
subscription or conversion orders for any reason and in particular in order to comply with the Circular
04/146 relating to the protection of UCIs and their investors against Late Trading and Market Timing
practices.
11.2 For example, excessive trading of Shares in response to short-term fluctuations in the market, a trading
technique sometimes referred to as Market Timing, has a disruptive effect on portfolio management
and increases the Sub-funds' expenses. Accordingly, the Company may, in the sole discretion of the
Board or the Management Company, compulsorily redeem Shares or reject any subscription orders
and conversions orders from any investor that the Company or the Management Company reasonably
believes has engaged in Market Timing activity. For these purposes, the Company and the
Management Company may consider an investor's trading history in the Sub-funds and accounts under
common control or ownership.
11.3 In addition to the Subscription or Conversion Fees which may be of application to such orders as set
forth in the Special Section of the relevant Sub-fund, the Company and the Management Company
may impose a penalty of maximum 2% (two per cent.) of the Net Asset Value of the Shares subscribed
or converted where the Company reasonably believes that an investor has engaged in Market Timing
activity. The penalty will be credited to the relevant Sub-fund. The Company, the Management
Company and the Board will not be held liable for any loss resulting from rejected orders or mandatory
redemption.
11.4 Furthermore, the Company will ensure that the relevant deadlines for requests for subscriptions,
redemptions or conversions are strictly complied with and will therefore take all adequate measures to
prevent practices known as Late Trading.
12. Calculation of Net Asset Value
12.1 The Company, each Sub-fund and each Class in a Sub-fund have a Net Asset Value determined in
accordance with the Articles. The Reference Currency of the Company is the EUR. The Net Asset
Value of each Sub-fund and Class will be calculated in the Reference Currency of the Sub-fund or
Class, as it is stipulated in the relevant Special Section, and will be determined by the Administrative
Agent for each Transaction Day as at each NAV Calculation Day as stipulated in the relevant Special
Section, by calculating the aggregate of:
(a) the value of all assets of the Company which are allocated to the relevant Sub-fund in
accordance with the provisions of the Articles; less
(b) all the liabilities of the Company which are allocated to the relevant Sub-fund and Class in
accordance with the provisions of the Articles, and all fees attributable to the relevant Sub-
fund and Class, which fees have accrued but are unpaid on the relevant Transaction Day.
12.2 The Net Asset Value per Share for a Transaction Day will be calculated in the Reference Currency of
the relevant Sub-fund and will be calculated by the Administrative Agent as at the NAV Calculation
Day of the relevant Sub-fund by dividing the Net Asset Value of the relevant Sub-fund by the number
of Shares which are in issue on such Transaction Day in the relevant Sub-fund (including Shares in
relation to which a Shareholder has requested redemption on such Transaction Day in relation to such
NAV Calculation Day).
12.3 If the Sub-fund has more than one Class in issue, the Administrative Agent will calculate the Net Asset
Value per Share of each Class for a Transaction Day by dividing the portion of the Net Asset Value of
the relevant Sub-fund attributable to a particular Class by the number of Shares of such Class in the
relevant Sub-fund which are in issue on such Transaction Day (including Shares in relation to which
48
a Shareholder has requested redemption on such Transaction Day in relation to such NAV Calculation
Day).
12.4 The Net Asset Value per Share may be rounded up or down to the nearest whole hundredth share of
the currency in which the Net Asset Value of the relevant Shares are calculated.
12.5 The allocation of assets and liabilities of the Company between Sub-funds (and within each Sub-fund
between the different Classes) will be effected so that:
(a) The subscription price received by the Company on the issue of Shares, and reductions in the
value of the Company as a consequence of the redemption of Shares, will be attributed to the
Sub-fund (and within that Sub-fund, the Class) to which the relevant Shares belong.
(b) Assets acquired by the Company upon the investment of the subscription proceeds and income
and capital appreciation in relation to such investments which relate to a specific Sub-fund
(and within a Sub-fund, to a specific Class) will be attributed to such Sub-fund (or Class in
the Sub-fund).
(c) Assets disposed of by the Company as a consequence of the redemption of Shares and
liabilities, expenses and capital depreciation relating to investments made by the Company
and other operations of the Company, which relate to a specific Sub-fund (and within a Sub-
fund, to a specific Class) will be attributed to such Sub-fund (or Class in the Sub-fund).
(d) Where the use of foreign exchange transactions, instruments or financial techniques relates to
a specific Sub-fund (and within a Sub-fund, to a specific Class) the consequences of their use
will be attributed to such Sub-fund (or Class in the Sub-fund).
(e) Where assets, income, capital appreciations, liabilities, expenses, capital depreciations or the
use of foreign exchange transactions, instruments or techniques relate to more than one Sub-
fund (or within a Sub-fund, to more than one Class), they will be attributed to such Sub-funds
(or Classes, as the case may be) in proportion to the extent to which they are attributable to
each such Sub-fund (or each such Class).
(f) Where assets, income, capital appreciations, liabilities, expenses, capital depreciations or the
use of foreign exchange transactions, instruments or techniques cannot be attributed to a
particular Sub-fund they will be divided equally between all Sub-funds or, in so far as is
justified by the amounts, will be attributed in proportion to the relative Net Asset Value of the
Sub-funds (or Classes in the Sub-fund) if the Company, in its sole discretion, determines that
this is the most appropriate method of attribution.
(g) Upon payment of dividends to the Shareholders of a Sub-fund (and within a Sub-fund, to a
specific Class) the net assets of this Sub-fund (or Class in the Sub-fund) are reduced by the
amount of such dividend.
12.6 The assets of the Company will be valued as follows:
(a) Transferable Securities or Money Market Instruments quoted or traded on an official stock
exchange or any other Regulated Market, are valued on the basis of the last known price, and,
if the securities or money market instruments are listed on several stock exchanges or
Regulated Markets, the last known price of the stock exchange which is the principal market
for the security or Money Market Instrument in question, unless these prices are not
representative.
(b) For Transferable Securities or Money Market Instruments not quoted or traded on an official
stock exchange or any other Regulated Market, and for quoted Transferable Securities or
49
Money Market Instruments, but for which the last known price is not representative, valuation
is based on the probable sales price estimated prudently and in good faith by the Board.
(c) Units and shares issued by UCITS or other UCIs will be valued at their last available net asset
value.
(d) The liquidating value of futures, forward or options contracts that are not traded on exchanges
or on other Regulated Markets will be determined pursuant to the policies established in good
faith by the Board, on a basis consistently applied. The liquidating value of futures, forward
or options contracts traded on exchanges or on other Regulated Markets will be based upon
the last available settlement prices of these contracts on exchanges and Regulated Markets on
which the particular futures, forward or options contracts are traded; provided that if a futures,
forward or options contract could not be liquidated on such Business Day with respect to
which a Net Asset Value is being determined, then the basis for determining the liquidating
value of such contract will be such value as the Board may, in good faith and pursuant to
verifiable valuation procedures, deem fair and reasonable.
(e) Liquid assets and Money Market Instruments with a maturity of less than 12 months may be
valued at nominal value plus any accrued interest or using an amortised cost method (it being
understood that the method which is more likely to represent the fair market value will be
retained). This amortised cost method may result in periods during which the value deviates
from the price the relevant Company would receive if it sold the investment. The Board may,
from time to time, assess this method of valuation and recommend changes, where necessary,
to ensure that such assets will be valued at their fair value as determined in good faith pursuant
to procedures established by the Board. If the Board believes that a deviation from the
amortised cost per Share may result in material dilution or other unfair results to Shareholders,
the Board will take such corrective action, if any, as it deems appropriate, to eliminate or
reduce, to the extent reasonably practicable, the dilution or unfair results.
(f) The swap transactions will be consistently valued based on a calculation of the net present
value of their expected cash flows. For certain Sub-funds using OTC Derivatives as part of
their main Investment Policy, the valuation method of the OTC Derivative will be further
specified in the relevant Special Section.
(g) Accrued interest on securities will be included if it is not reflected in the Share price.
(h) Cash will be valued at nominal value, plus accrued interest.
(i) All assets denominated in a currency other than the Reference Currency of the respective Sub-
fund/Class will be converted at the mid-market conversion rate between the Reference
Currency and the currency of denomination.
(j) All other securities and other permissible assets as well as any of the above mentioned assets
for which the valuation in accordance with the above sub-paragraphs would not be possible
or practicable, or would not be representative of their probable realisation value, will be valued
at probable realisation value, as determined with care and in good faith pursuant to procedures
established by the Company.
13. Suspension of determination of Net Asset Value, issue, redemption and conversion of Shares
13.1 The Company or the Management Company may at any time and from time to time suspend the
determination of the Net Asset Value of Shares of any Sub-fund or Class and/or the issue of the Shares
of such Sub-fund or Class to subscribers and/or the redemption of the Shares of such Sub-fund or Class
from its Shareholders as well as conversions of Shares of any Class in a Sub-fund:
50
(a) when one or more stock exchanges or markets, which provide the basis for valuing a
substantial portion of the assets of the relevant Sub-fund or Class, or when one or more foreign
exchange markets in the currency in which a substantial portion of the assets of the relevant
Sub-fund or Class are denominated, are closed otherwise than for ordinary holidays or if
dealings therein are restricted or suspended;
(b) when, as a result of political, economic, military or monetary events or any circumstances
outside the responsibility and the control of the Board, disposal of the assets of the relevant
Sub-fund or Class is not reasonably or normally practicable without being seriously
detrimental to the interests of the Shareholders;
(c) in the case of a breakdown in the normal means of communication used for the valuation of
any investment of the relevant Sub-fund or Class or if, for any reason beyond the responsibility
of the Board, the value of any asset of the relevant Sub-fund or Class may not be determined
as rapidly and accurately as required;
(d) if, as a result of exchange restrictions or other restrictions affecting the transfer of funds,
transactions on behalf of the Company are rendered impracticable or if purchases and sales of
the Sub-fund's assets cannot be effected at normal rates of exchange;
(e) when the Board so decides, provided that all Shareholders are treated on an equal footing and
all relevant laws and regulations are applied (i) upon publication of a notice convening a
general meeting of Shareholders of the Company or of a Sub-fund for the purpose of deciding
on the liquidation, dissolution, the merger or absorption of the Company or the relevant Sub-
fund and (ii) when the Board is empowered to decide on this matter, upon their decision to
liquidate, dissolve, merge or absorb the relevant Sub-fund;
(f) in case of the Company's liquidation or in the case a notice of termination has been issued in
connection with the liquidation of a Sub-fund or a class of shares;
(g) where, in the opinion of the Board, circumstances which are beyond the control of the Board
make it impracticable or unfair vis-à-vis the Shareholders to continue trading the Shares.
13.2 Any such suspension may be notified by the Company or the Management Company in such manner
as it may deem appropriate to the persons likely to be affected thereby. The Company or Management
Company will notify Shareholders requesting redemption or conversion of their Shares of such
suspension.
13.3 Such suspension as to any Sub-fund will have no effect on the calculation of the Net Asset Value per
Share, the issue, redemption and conversion of Shares of any other Sub-fund.
13.4 Any request for subscription, redemption and conversion will be irrevocable except in the event of a
suspension of the calculation of the Net Asset Value per Share in the relevant Sub-fund. Withdrawal
of a subscription or of an application for redemption or conversion will only be effective if written
notification (by electronic mail, regular mail, courier or fax) is received by the Administrative Agent
before termination of the period of suspension, failing which subscription, redemption applications not
withdrawn will be processed on the first Transaction Day following the end of the suspension period,
on the basis of the Net Asset Value per Share determined for such Transaction Day.
14. Fiscal Year and reporting – Shareholders' meeting
Fiscal Year - Reporting
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14.1 The Fiscal Year will begin on 1 July and terminate on 30 June of each year, except for the first Fiscal
Year which began on 29 June 2011 and ended on 30 June 2012.
14.2 Audited annual reports of the end of each Fiscal Year will be established as at 30 June of each year. In
addition, unaudited semi-annual reports will be established as per the last day of the month of
December and for the first time as at 31 December 2012. Those financial reports will provide for
information on each of the Sub-fund's assets as well as the consolidated accounts of the Company and
be made available to the Shareholders free of charge at the registered office of the Company and of
the Administrative Agent.
14.3 The financial statements of each Sub-fund will be established in the Reference Currency of the Sub-
fund but the consolidated accounts will be in EUR.
14.4 Audited annual reports will be published within 4 months following the end of the accounting year
and unaudited semi-annual reports will be published within 2 months following the end of period to
which they refer.
14.5 The Net Asset Value per Share of each Class within in each Sub-fund will be made public at the offices
of the Company, the Management Company and the Administrative Agent on each NAV Calculation
Day.
14.6 Documents available for inspection by Shareholders free of charge, during usual business hours at the
offices of the Company, the Management Company and the Administrative Agent in Luxembourg
(copies of these documents may also be delivered without cost to Shareholders at their request):
(a) the Articles;
(b) the Management Company Agreement;
(c) the Depositary Agreement;
(d) the Administration Agreement; and
(e) the most recent annual and semi-annual financial statements of the Company.
14.7 The above agreements may be amended from time to time by all the parties involved.
14.8 A copy of the Prospectus, KIID(s), the most recent financial statements and the Articles may be
obtained free of charge upon request at the registered office of the Company.
General Meeting of Shareholders
14.9 The annual general meeting of the Shareholders in the Company shall be held at the registered office
of the Company or on the place specified in the convening notice on the last Thursday in October of
each year at 16.00 (Luxembourg time).
14.10 Notice of any general meeting of shareholders (including those considering amendments to the Articles
or the dissolution and liquidation of the Company or of any Sub-fund) will be mailed to each registered
Shareholder at least eight days prior to the meeting and will be published to the extent required by
Luxembourg law in the Mémorial and in any Luxembourg and other newspaper(s) that the Board may
determine.
14.11 Such notices shall contain the agenda, the date and place of the meeting, the conditions of admission
to the meeting and they shall refer to the applicable quorum and majority requirements. The meetings
52
of Shareholders of Shares of a particular Sub-fund may decide on matters which are relevant only for
the Sub-fund concerned.
14.12 To the extent permitted by law, the convening notice to a General Meeting may provide that the
quorum and majority requirements will be assessed against the number of Shares issued and
outstanding at midnight (Luxembourg time) on the fifth day prior to the relevant meeting (the Record
Date) in which case, the right of any Shareholder to participate in the meeting will be determined by
reference to his/her/its holding as at the Record Date.
15. Fees and Expenses
Fees and expenses payable directly by the Company
Operation and administration expenses
15.1 The Company will pay out of the assets of the relevant Sub-fund all expenses incurred by it, which
will include but not be limited to: all taxes which may be due on the assets and the income of the
Company; the reasonable disbursements and out-of-pocket expenses (including without limitation
telephone, telex, cable and postage expenses) incurred by the Depositary and any custody charges of
banks and financial institutions to whom custody of assets of the Company is entrusted; usual banking
fees due on transactions involving securities or other assets (including derivatives) held in the portfolio
of the Company (such fees to be included in the acquisition price and to be deducted from the selling
price); the fees, expenses and all reasonable out-of-pocket expenses properly incurred by the
Company, the Management Company, the Service Providers and any other agent appointed by the
Company; legal expenses incurred by the Company or the Service Providers while acting in the
interests of the Shareholders; the cost and expenses of preparing and/or filing and printing the Articles
and all other documents concerning the Company (in such languages as are necessary), including
registration statements, prospectuses and explanatory memoranda with all authorities (including local
securities dealers' associations) having jurisdiction over the Company or the offering of Shares of the
Company; the cost of preparing, in such languages as are necessary for the benefit of the Shareholders
(including the beneficial holders of the Shares), and distributing annual and semi-annual reports and
such other reports or documents as may be required under applicable laws or regulations; the cost of
accounting, bookkeeping and calculating the Net Asset Value; the cost of preparing and distributing
notices to the Shareholders; a reasonable share of the cost of promoting the Company, as determined
in good faith by the Company, including reasonable marketing and advertising expenses; the costs
incurred with the admission and the maintenance of the Shares on the stock exchanges on which they
are listed (if listed). The Company may accrue in its accounts of administrative and other expenses of
a regular or recurring nature based on an estimated amount rateably for yearly or other periods.
15.2 The Depositary and Administrative Agent are entitled to receive, out of the assets of each Class within
each Sub-fund, a fee corresponding to a maximum of 2 % p.a. of the Net Asset Value subject to a
minimum fee of EUR 15,000- per annum for the Depositary, and a minimum fee of EUR 25,200- per
annum for the Administrative Agent. Further information on the depositary and administrative agent
fees payable to the Depositary under the Depositary Agreement and to the Administrative Agent under
the Administrative Agency Agreement (including the applicable minimum fee per annum) can be
obtained by investors from the Management Company upon request. Depositary and Administrative
Agency fees paid to the Depositary and to the Administrative Agent, in respect of each Fiscal Year
will be disclosed in the Company's annual reports and, in respect of each semi-annual period, in the
relevant semi-annual report. In addition, the Depositary and Administrative Agent are entitled to any
reasonable expenses properly incurred in carrying out their duties under the Depositary Agreement
and Administrative Agency Agreement.
Management Company Fee and related expenses
53
15.3 In consideration for the services provided by the Management Company, the Management Company
is entitled to an annual Management Company Fee, calculated as the average of the month-end Net
Asset Value of the previous quarter and invoiced quarterly in arrears. The Management Company Fee
is payable quarterly out of the assets of each Sub-fund at a rate as specified for each Sub-fund and/or
Class in the relevant Special Section. The Management Company Fee is subject to a maximum of
0.08% p.a. of the Net Asset Value and subject to a minimum per annum applicable at Company level
up to 3 Sub-funds of EUR 60,000. For any additional Sub-fund, the annual minimum fee at Company
level will be increased by EUR 20,000.
15.4 In addition to the Management Company Fee, the Management Company is entitled to an annual fee
per Sub-fund of up to EUR 27,000 for the provision of risk management and investment compliance
monitoring services.
15.5 In addition, where applicable, any value added tax ("VAT") associated with the above fees and
reimbursements will be charged to the relevant Sub-Fund.
Remuneration of the Investment Manager(s) or Investment Adviser(s)
15.6 If an Investment Manager or Investment Adviser is entitled to receive a remuneration out of the assets
of a Sub-fund, then such remuneration will be disclosed in the relevant Special Section.
Servicing Fee
15.7 If the Company agrees to a payment of a Servicing Fee to a specialised service provider in relation to
the structuring, launch and running out of the assets of a Sub-fund, then such remuneration will be
disclosed in the relevant Special Section. Additional Servicing Fees may be charged when a specialised
service provider is appointed to project manage and advise on a special project like a payment in kind
or a liquidation of a Sub-fund. The Company may agree to indemnify the specialised service provider
for any claim, liability, cost or expense asserted against the service provider in connection with
providing such services to the Company, except to the extent of the service provider’s gross
negligence, wilful misconduct or fraud;
15.8 For the avoidance of doubt, a Servicing Fee does not contain the fees for legal, tax and similar advisory
services.
Formation and launching expenses
15.9 The Initial Sub-fund will bear the formation and launching expenses (including but not limited to legal
fees related to the set-up of the Company, travel expenses, etc.) incurred on behalf of, or in connection
with, the formation of the Company and the launching of the Initial Sub-fund. These expenses are
estimated at a maximum of EUR 75,000 and will be written off over a period not exceeding five years.
Expenses incurred in connection with the creation of any additional Sub-fund may be borne by the
relevant Sub-fund and be written off over a period not exceeding five years. Hence, the additional Sub-
funds will not bear a pro rata proportion of the formation and launching expenses incurred on behalf
of, or in connection with, the formation of the Company and the launching of the Initial Sub-fund.
Annual subscription tax (Taxe d'abonnement)
15.10 The Company's assets are subject to tax (taxe d'abonnement) in Luxembourg at a rate of 0.05% p.a.
on net assets (except for Sub-funds or Classes which are reserved to Institutional Investors which are
subject to a tax at a reduced rate of 0.01% p.a. on net assets), payable quarterly. In case some Sub-
funds are invested in other Luxembourg UCIs, which in turn are subject to the subscription tax
provided for by the 2010 Act, no subscription tax is due from the Company on the portion of assets
invested therein.
54
Fees and expenses payable directly by the investor
Subscription Fee
15.11 If an investor wants to subscribe Shares, a Subscription Fee may be added to the subscription price to
be paid by the investor. The applicable Subscription Fee will be stipulated in the relevant Special
Section. This fee will be payable to the Company or the Distributor, unless otherwise specified in
respect of a Sub-fund in the relevant Special Section.
Redemption Fee
15.12 If a Shareholder wants to redeem Shares of the Company, a Redemption Fee may be levied on the
amount to be paid to the Shareholder. The applicable Redemption Fee will be stipulated in the relevant
Special Section. This fee will be payable to the Company or the Distributor, unless otherwise specified
in respect of a Sub-fund in the relevant Special Section.
Conversion Fee
15.13 A Conversion Fee, in favour of Sub-fund from which the Shares are converted, of up to 1% of the Net
Asset Value of the Shares of the relevant Class of the relevant new Sub-fund to be issued may be levied
to cover conversion costs. The same rate of Conversion Fee will be applied to all conversion requests
received on the same Transaction Day.
15.14 Dilution Levy
A Sub-Fund may suffer a reduction in its value as a result of the transaction costs incurred in the
purchase and sale of the underlying investments of such Sub-fund and/or the spread between the
buying and selling prices of such investments, which in either case may result from subscriptions,
redemptions and/or conversions for Shares of that Sub-Fund. This adverse effect is known as
"dilution". In order to attempt to mitigate the impact of dilution, the Board of Directors may at their
discretion charge a dilution levy on subscriptions, redemptions or conversions of Shares. The charge
of the dilution levy will be implemented in accordance with criteria set by the Board of Directors from
time to time and a dilution levy may only be imposed for the purpose of mitigating the impact of
dilution.
The rate of any dilution levy will vary from time to time to reflect the current market conditions and
will be levied at the same rate for all Shareholders subscribing, converting or redeeming Shares on a
particular day to protect the interests of existing or remaining Shareholders. The dilution levy will be
credited to the Sub-Fund in question for the benefit of its existing or remaining Shareholders. The rate
of the dilution levy, if applicable, is set out in the Special Section of the relevant Sub-Fund.
16. Dividend policy
16.1 Each year the general meeting of Shareholders will decide, based on a proposal from the Board, for
each Sub-fund, on the use of the balance of the year's net income of the investments. A dividend may
be distributed, either in cash or Shares. Further, dividends may include a capital distribution, provided
that after distribution the net assets of the Company total more than EUR 1,250,000 (being provided
that Shares of a Target Sub-fund held by a Cross-investing Sub-fund shall not be taken into account
for the purpose of the calculation of the EUR 1,250,000 minimum capital requirement).
16.2 Over and above the distributions mentioned in the preceding paragraph, the Board may decide to the
payment of interim dividends in the form and under the conditions as provided by law.
55
16.3 The Company may issue Accumulation Classes and Distribution Classes within the Classes of each
Sub-fund, as indicated in the Special Section. Accumulation Classes capitalise their entire earnings
whereas Distribution Classes pay dividends.
16.4 For Distribution Classes, dividends, if any, will be declared and distributed on an annual basis.
Moreover, interim dividends may be declared and distributed from time to time at a frequency
determined by the Company within the conditions set forth by law, as further described in the relevant
Special Section.
16.5 Payments will be made in the Reference Currency of the relevant Sub-fund. With regard to Shares
held through Euroclear or Clearstream (or their successors), dividends shall be paid by bank transfer
to the relevant bank. Dividends remaining unclaimed for five years after their declaration will be
forfeited and revert to the relevant Sub-fund.
16.6 Unless otherwise stated for a particular Sub-fund in the relevant Special Section, the Company is
authorised to make in-kind distributions/payments of securities or other assets with the consent of the
relevant Shareholder(s). Any such distributions/payments in kind will be valued in a report established
by an auditor qualifying as a réviseur d'entreprises agréé drawn up in accordance with the
requirements of Luxembourg Law, the costs of which report will be borne by the relevant Shareholder.
17. Liquidation and merger of Sub-funds or Classes
Dissolution of the Company
17.1 The duration of the Company is not limited by the Articles. The Company may be wound up by
decision of an extraordinary general meeting of Shareholders. If the total net assets of the Company
falls below two-thirds of the minimum capital prescribed by law (i.e. EUR1,250,000), the Board must
submit the question of the Company's dissolution to a general meeting of Shareholders for which no
quorum is prescribed and which shall pass resolutions by simple majority of the Shares represented at
the meeting.
17.2 If the total net assets of the Company fall below one-fourth of the minimum capital prescribed by law,
the Board must submit the question of the Company's dissolution to a general meeting of Shareholders
for which no quorum is prescribed. A resolution dissolving the Company may be passed by
Shareholders holding one-fourth of the Shares represented at the meeting.
17.3 The meeting must be convened so that it is held within a period of forty days from the date of
ascertainment that the net assets have fallen below two-thirds or one-fourth of the legal minimum, as
the case may be.
17.4 If the Company is dissolved, the liquidation shall be carried out by one or several liquidators appointed
in accordance with the provisions of the 2010 Act. The decision to dissolve the Company will be
published in the Mémorial and two newspapers with adequate circulation, one of which must be a
Luxembourg newspaper. The liquidator(s) will realise each Sub-fund's assets in the best interests of
the Shareholders and apportion the proceeds of the liquidation, after deduction of liquidation costs,
amongst the Shareholders of the relevant Sub-fund according to their respective prorata. Any amounts
unclaimed by the Shareholders at the closing of the liquidation of the Company will be deposited with
the Caisse de Consignation in Luxembourg for a duration of thirty (30) years. If amounts deposited
remain unclaimed beyond the prescribed time limit, they shall be forfeited.
17.5 As soon as the decision to wind up the Company is made, the issue, redemption or conversion of
Shares in all Sub-funds will be prohibited and shall be deemed void.
Liquidation of Sub-funds or Classes – Merger
56
17.6 If, for any reason, the value of the total net assets in any Sub-fund or Class has decreased to, or has not
reached, EUR 20 million or another amount determined by the Company to be the minimum level for
such Sub-fund or Class to be operated in an economically efficient manner (i.e. below the Minimum
Net Asset Value), or in the event of a substantial change in the economic or political environment of
the relevant Sub-fund or Class that may have material adverse consequences on the Sub-fund or Class's
investments, or if an economic rationalisation so requires, the Board may decide on a compulsory
redemption of all Shares outstanding in such Sub-fund or Class on the basis of the Net Asset Value
per Share (after taking account of current realisation prices of the investments as well as realisation
expenses), calculated on the NAV Calculation Day at which such decision shall take effect. The
Company will serve a notice to the holders of the relevant Shares prior to the effective date for the
compulsory redemption, which will indicate the reasons of and the procedure for the redemption
operations. Registered Shareholders will be notified in writing. Unless the Board decides otherwise in
the interests of, or in order to keep equal treatment between the Shareholders, the Shareholders of the
Sub-fund or Class concerned may continue to request redemption or conversion of their Shares free of
redemption or conversion charge. However, the liquidation costs will be taken into account in the
redemption and conversion price.
17.7 Notwithstanding the powers granted to the Board as described in the previous paragraph, a general
meeting of Shareholders of a Sub-fund or Class may, upon proposal of the Board, decide to repurchase
all the Shares in such Sub-fund or Class and to reimburse the Shareholders on the basis of the Net
Asset Value of their Shares (taking account of current realisation prices of the investments as well as
realisation expenses) calculated as of the NAV Calculation Day on which such decision shall become
effective. The Board may decide to retain a reasonable liquidation provision from the Net Asset Value
of the Shares to cover costs and expenses, including the anticipated realisation of unamortised
formation expenses, the crystallisation of not yet fully accrued provisions and costs related to the
liquidation process. No quorum shall be required at this general meeting and resolutions shall be passed
by a simple majority of the shareholders present or represented, provided that the decision does not
result in the liquidation of the Company.
17.8 All the Shares redeemed will be cancelled.
17.9 Under the same circumstances as provided by Section 17.6, the Board may decide to allocate the assets
of any Sub-fund to those of another existing Sub-fund within the Company or to another Luxembourg
UCITS or to another sub-fund within such other Luxembourg UCITS (the new Sub-fund) and to
redesignate the Shares of the Class or Classes concerned as Shares of another Class (following a split
or consolidation, if necessary, and the payment of the amount corresponding to any fractional
entitlement to Shareholders). Such decision will be published in the same manner as described above
and, in addition, the publication will contain information in relation to the new Sub-fund or the other
Luxembourg UCITS. Such publication will be made not less than one month before the date on which
the merger or contribution becomes effective in order to enable Shareholders to request redemption of
their Shares, free of redemption charge, before the contribution becomes effective. Shareholders will
receive shares of the surviving Luxembourg UCITS or Sub-fund except in those situations when the
Company or Sub-fund or Class is the surviving entity. Any new share received in such transaction will
have the same value as any Shares relinquished in the transaction.
17.10 Notwithstanding the powers granted to the Board in the above paragraph, a contribution of the assets
and liabilities of a Sub-fund or Class to another Sub-fund or Class of the Company may be decided by
the general meeting of Shareholders of the contributing Sub-fund or Class. No quorum shall be
required and a decision on such contribution shall be taken by a resolution passed by the majority of
the shareholders present or represented, provided that this contribution does not result in the liquidation
of the Company.
17.11 A contribution of the assets and liabilities attributable to a Sub-fund or Class to another UCITS or to
another class of such UCITS may be decided by a general meeting of Shareholders of the contributing
Sub-fund or Class by a resolution of the Shareholders of the class or classes of shares issued in the
57
Sub-fund concerned taken with a 50% quorum requirement of the shares in issue and adopted at a 2/3
majority of the shares present or represented and voting. Where the contribution is to be made to a
mutual investment fund (fonds commun de placement) or a foreign-based UCITS, such resolution shall
be binding only on Shareholders who have approved the proposed contribution. The Board may also,
under the same circumstances as provided above, decide to merge one Sub-fund by a contribution into
a foreign UCI. In such case, approval of the relevant Shareholders should be sought or the merger be
made upon the condition that only the assets of the consenting Shareholders be contributed to the
foreign UCI.
17.12 For the interest of the Shareholders of the relevant Sub-fund or in the event that a substantial change
in the economic or political situation relating to a Sub-fund so justifies, the Board may proceed to the
reorganisation of such Sub-fund by means of a division into two or more Sub-funds. Such decision
will be published in the same manner as described above. Information concerning the new Sub-fund(s)
will be provided to the relevant Shareholders. Such publication will be made one month prior to the
effectiveness of the reorganisation in order to permit Shareholders to request redemption of their
Shares free of charge during such one month prior period.
18. Taxation
18.1 The Company's assets are subject to a subscription tax (taxe d'abonnement) in Luxembourg at a rate
of 0.05% p.a. on net assets (except for Sub-funds or Classes which are reserved to Institutional
Investors or UCIs which are subject to a tax at a reduced rate of 0.01% p.a. on net assets), payable
quarterly. In the case some Sub-funds are invested in other Luxembourg UCIs, which in turn are
subject to the subscription tax provided for by the 2010 Act, no subscription tax is due by the Company
on the portion of assets invested therein.
18.2 The Company's income is not taxable in Luxembourg. Income received by the Company may be
subject to withholding taxes in the country of origin of the issuer of the security, in respect of which
such income is paid. No duty or tax is payable in Luxembourg in connection with the issue of Shares
of the Company.
18.3 Under current legislation, Shareholders are not subject to any capital gains, income, withholding, or
other taxes in Luxembourg with respect to their investment in the Shares, except for (i) those
Shareholders resident of, or established in Luxembourg, or having a permanent establishment or
permanent representative in Luxembourg, or (ii) the withholding tax referred to in Section 18.5 to
18.10.
18.4 The information referred to in the previous paragraph is limited to the taxation of the Shareholders in
Luxembourg in respect of their investment in the Shares and does not include an analysis of their
taxation resulting from the underlying investments of the Company.
EU tax considerations for individuals resident in the EU or in certain third countries or
dependent or associated territories
18.5 Under the EU Savings Directive, EU Member States were required to provide the tax authorities of
another EU Member State with information on payments of interest or other similar income paid by a
paying agent (as defined by the EU Savings Directive) within its jurisdiction to an individual resident
or a residual entity (as defined in the EU Savings Directive) in that other EU Member State. Austria
and Luxembourg had opted instead for a tax withholding system for a transitional period in relation to
such payments. Switzerland, Monaco, Liechtenstein, Andorra, and San Marino, the Channel Islands,
the Isle of Man and the dependent or associated territories in the Caribbean have also introduced
measures equivalent to information reporting or, during the above transitional period, withholding tax.
58
The European Commission proposed certain amendments to the EU Savings Directive, to amend or
broaden the scope of the requirements described above.
18.6 Dividends distributed by a Sub-fund are be subject to the EU Savings Directive and the 2005 Savings
Act if more than 15% of such Sub-fund's assets are invested in debt claims (as defined in the 2005
Savings Act) and income realised by Shareholders on the redemption or sale of Shares are subject to
the EU Savings Directive and the 2005 Savings Act if more than 25% of such Sub-fund's assets are
invested in debt claims (such funds, hereafter Affected Sub-funds).
18.7 Consequently, if in relation to an Affected Sub-fund a Luxembourg paying agent makes a dividend
distribution or pays income realised on the redemption or sale of Shares directly to a Shareholder who
is an individual or a residual entity within the meaning of article 4.2 of the 2005 Savings Act resident
or deemed resident for tax purposes in another EU Member State or the Territories, such payment are,
subject to the next paragraph below, subject to withholding tax at the rate indicated below.
18.8 No withholding tax is withheld by the Luxembourg paying agent if:
(a) the relevant individual either (i) has expressly authorised the paying agent to report
information to the tax authorities in accordance with the provisions of the 2005 Savings Act
or (ii) has provided the paying agent with a certificate drawn up in the format required by the
2005 Savings Act by the competent authorities of his/her State of residence for tax purposes;
or
(b) the relevant residual entity has expressly authorised the paying agent to report information to
the tax authorities in accordance with the provisions of the 2005 Savings Act.
18.9 Since 1 July 2011, the applicable withholding tax is at a rate of 35%. The Luxembourg government
elected out of the withholding system in favour of the automatic exchange of information with effect
as from 1 January 2015.
However, the Council of the European Union has adopted the repeal of the EU Savings Directive
from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other
Member States (subject to on-going requirements to fulfil administrative obligations, such as the
reporting and exchange of information relating to, and accounting for withholding taxes on,
payments made before these dates) to prevent overlap between the EU Savings Directive and a
new automatic exchange of information regime to be implemented under the CRS Directive. As
a consequence of the above also the 2005 Savings Act will no longer apply.
The CRS Directive significantly extends the scope of the automatic exchange of information for tax
purposes among EU Member States, it is based on the Common Reporting Standard (the “CRS”),
developed by the OECD to achieve a comprehensive and multilateral automatic exchange of
information, and shall become effective as of 1 January 2016, with a view of performing the first
exchange of information between tax authorities of EU Member States in 2017.
The CRS Directive, as transposed into Luxembourg national law. will substantially increase the
compliance burden for entities, such as the Company, holding accounts for investors of countries that
adhered to the CRS model. As a consequence, the Company or its delegates will be requested to report
to the Luxembourg tax authorities any personal data (such as interests, dividends and other income,
proceeds from sales or redemptions, account balances) on accounts held by the Shareholders if they
reside outside Luxembourg and in a country that participates to the CRS programme (the “CRS
Country”). The Luxembourg tax authorities will then transfer those data to the tax authorities of the
residence country of the Shareholder if such country is a CRS Country. Each Shareholder has a right
of access to his/her/its personal data provided to the Luxembourg tax authorities and may ask for a
rectification thereof if such data is inaccurate or incomplete.
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In order to comply with its reporting obligations the Company or its delegates will need, as from 1
January 2016, to obtain sufficient information on its Shareholders to detect any residency indicia that
would give rise to a report on the relevant Shareholders’ account. The provision of the information is
mandatory and the Company and its delegates may take any suitable action, such us refusing an
account opening if the information is not provided. The information is stored for the period requested
by the CRS Directive and its related Luxembourg transposing laws and in any case in line with the
applicable record keeping retention period applicable to the Company.
The Company is the controller of the personal data that will be processed for the purpose of the CRS
Directive; it shall guarantee a secured, limited and controlled access to the data. The Shareholders shall
be duly notified of any disruption to the data processing that could impair the protection of their
personal or private data. The processing of the personal data will be performed in compliance with the
provision of the CRS Directive and its related Luxembourg transposing laws. Further information on
data protection is contained under the Data Protection section of this Prospectus.
18.10 The foregoing is only a summary of the implications of the EU Savings Directive, the 2005 Savings
Act and the CSR Directive; it is based on the current interpretation thereof and does not purport to be
complete in all respects. It does not constitute investment or tax advice and investors should therefore
seek advice from their financial or tax adviser on the full implications for themselves of the EU Savings
Directive, the 2005 Savings Act and the CRS Directive.
Other jurisdictions
18.11 Interest, dividend and other income realised by the Company on the sale of securities, may be subject
to withholding and other taxes levied by the jurisdictions in which the income is sourced. It is
impossible to predict the rate of foreign tax the Company will bear since the amount of the assets to
be invested in various countries and the ability of the Company to reduce such taxes is not known.
18.12 It is expected that Shareholders may be resident for tax purposes in many different countries.
Consequently, no attempt is made in this Prospectus to summarise the tax consequences for each
prospective investor of subscribing, converting, holding, redeeming or otherwise acquiring or
disposing of Shares in the Company. These consequences will vary in accordance with the law and
practice currently in force in a Shareholder's country of citizenship, residence, domicile or
incorporation and with his or her personal circumstances.
Future changes in applicable law
18.13 The foregoing description of Luxembourg tax consequences of an investment in, and the operations
of, the Company is based on laws and regulations which are subject to change through legislative,
judicial or administrative action. Other legislation could be enacted that would subject the Company
to income taxes or subject Shareholders to increased income taxes.
18.14 THE INFORMATION SET OUT ABOVE IS A SUMMARY OF THOSE TAX ISSUES WHICH
COULD ARISE IN LUXEMBOURG AND DOES NOT PURPORT TO BE A COMPREHENSIVE
ANALYSIS OF THE TAX ISSUES WHICH COULD AFFECT A PROSPECTIVE SUBSCRIBER.
18.15 THE TAX AND OTHER MATTERS DESCRIBED IN THIS PROSPECTUS DO NOT
CONSTITUTE, AND SHOULD NOT BE CONSIDERED AS, LEGAL OR TAX ADVICE TO
PROSPECTIVE SUBSCRIBERS. PROSPECTIVE SUBSCRIBERS SHOULD CONSULT THEIR
OWN COUNSEL REGARDING TAX LAWS AND REGULATIONS OF ANY OTHER
JURISDICTION WHICH MAY BE APPLICABLE TO THEM.
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19. Risk factors
19.1 Before making an investment decision with respect to Shares of any Class in any Sub-fund, prospective
investors should carefully consider all of the information set out in this Prospectus and the relevant
Special Section, as well as their own personal circumstances. Prospective investors should have
particular regard to, among other matters, the considerations set out in this Section and under the
Sections "Risk Factors" (if any) and "Profile of Typical Investor" in the relevant Special Section. The
risk factors referred to therein, and in this document, alone or collectively, may reduce the return on
the Shares of any Sub-fund and could result in the loss of all or a proportion of a Shareholder's
investment in the Shares of any Sub-fund. The price of the Shares of any Sub-fund can go down as
well as up and their value is not guaranteed. Shareholders may not receive, at redemption or
liquidation, the amount that they originally invested in any Class or any amount at all.
19.2 The risks may include or relate to equity markets, bond markets, foreign exchange rates, interest rates,
credit risk, the use of derivatives, counterparty risk, market volatility and political risks. The risk
factors set out in this Prospectus and the relevant Special Section are not exhaustive. There may be
other risks that a prospective investor should consider that are relevant to its own particular
circumstances or generally.
19.3 An investment in the Shares of any Sub-fund is only suitable for investors who (either alone or in
conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and
risks of such an investment and who have sufficient resources to be able to bear any losses that may
result therefrom.
19.4 Before making any investment decision with respect to the Shares, prospective investors should
consult their own stockbroker, bank manager, lawyer, solicitor, accountant and/or financial adviser
and carefully review and consider such an investment decision in the light of the foregoing and the
prospective investor's personal circumstances.
19.5 The Company is intended to be a medium to long-term investment vehicle (depending on the
investment policy of the relevant Sub-funds). Shares may however be redeemed on each Transaction
Day. Substantial redemptions of Shares by Shareholders within a limited period of time could cause
the Company to liquidate positions more rapidly than would otherwise be desirable, which could
adversely affect the value of both the Shares being redeemed and the outstanding Shares. In addition,
regardless of the period of time in which redemptions occur, the resulting reduction in the Net Asset
Value per Share could make it more difficult for the Company to generate trading profits or recover
losses.
General economic conditions
19.6 The success of any investment activity is affected by general economic conditions, which may affect
the level and volatility of interest rates and the liquidity of the markets for both equities and interest-
rate-sensitive securities. Certain market conditions, including unexpected volatility or illiquidity in the
market in which the Company directly or indirectly holds positions, could impair the Company's ability
to achieve its objectives and/or cause it to incur losses.
Indemnities
19.7 Certain Service Providers of a Sub-fund and their directors, managers, officers and employees may
benefit from an indemnification under the relevant Service Agreement and could therefore, in certain
circumstances, be indemnified out of the relevant Sub-fund's assets against liabilities, costs, expenses
(including, e.g., legal expenses) incurred by reason of such person or entity providing services to the
relevant Sub-fund. In principle, however, indemnification clauses will generally contain carve outs in
relation to acts or omissions that incur, e.g., gross negligence, fraud, wilful default or reckless
disregard.
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Key Persons
19.8 The success of the Company or of its Sub-funds will largely depend on the experience, relationships
and expertise of the key persons within the Board, the Management Company or the Investment
Manager, if any, which have long term experience in the respective area of investment. The
performance of the Company or any Sub-fund may be negatively affected if any of the key persons
involved in the management or investment process of the Company or particular Sub-fund would for
any reason cease to be involved. Furthermore, the key persons might be involved in other businesses,
including in similar projects or investment structures, and not be able to devote all of their time to the
Company or the respective Sub-fund. In addition the involvement in similar projects or investment
structures may create a source for potential conflicts of interest.
Exchange rates
19.9 Investors in the Shares should be aware that an investment in the Shares may involve exchange rate
risks. For example (i) a Sub-fund may have direct or indirect exposure to a number of different
currencies of emerging market or developed countries; (ii) a Sub-fund may invest in securities or other
eligible assets denominated in currencies other than the Sub-fund's Reference Currency; (iii) the Shares
may be denominated in a currency other than the currency of the investor's home jurisdiction; and/or
(iv) the Shares may be denominated in a currency other than the currency in which an investor wishes
to receive his monies. Exchange rates between currencies are determined by factors of supply and
demand in the international currency markets, which are influenced by macro economic factors (such
as the economic development in the different currency areas, interest rates and international capital
movements), speculation and central bank and government intervention (including the imposition of
currency controls and restrictions). Fluctuations in exchange rates may affect the value of the Shares.
Interest rate
19.10 Investors in the Shares should be aware that an investment in the Shares may involve interest rate risk
in that there may be fluctuations in the currency of denomination of securities or other eligible assets
in which a Sub-fund invests the Shares.
19.11 Interest rates are determined by factors of supply and demand in the international money markets
which are influenced by macro economic factors, speculation and central bank and government
intervention. Fluctuations in short term and/or long term interest rates may affect the value of the
Shares. Fluctuations in interest rates of the currency in which the Shares are denominated and/or
fluctuations in interest rates of the currency or currencies in which the securities or other eligible assets
in which a Sub-fund invests are denominated may affect the value of the Shares.
Market volatility
19.12 Market volatility reflects the degree of instability and expected instability of the securities or other
eligible assets in which a Sub-fund invests, the performance of the Shares, or the techniques used to
link the net proceeds of any issue of Shares to OTC Derivatives underlying asset(s), where applicable.
The level of market volatility is not purely a measurement of the actual volatility, but is largely
determined by the prices for instruments which offer investors protection against such market
volatility. The prices of these instruments are determined by forces of supply and demand in the options
and derivatives markets generally. These forces are, themselves, affected by factors such as actual
market volatility, expected volatility, macro economic factors and speculation.
Credit risk
19.13 Investors in the Shares should be aware that such an investment may involve credit risk. Bonds or
other debt securities involve credit risk to the issuer which may be evidenced by the issuer's credit
rating. Securities which are subordinated and/or have a lower credit rating are generally considered to
62
have a higher credit risk and a greater possibility of default than more highly rated securities. In the
event that any issuer of bonds or other debt securities experiences financial or economic difficulties,
this may affect the value of the relevant securities (which may be zero) and any amounts paid on such
securities (which may be zero). This may in turn affect the Net Asset Value per Share.
Investments in emerging markets
19.14 In certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political
or social instability or diplomatic developments which could affect investment in those countries.
There may be less publicly available information about certain financial instruments than some
investors would find customary and entities in some countries may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to those to which certain
investors may be accustomed. Certain financial markets, while generally growing in volume, have for
the most part, substantially less volume than more developed markets, and securities of many
companies are less liquid and their prices more volatile than securities of comparable companies in
more sizeable markets. There are also varying levels of government supervision and regulation of
exchanges, financial institutions and issuers in various countries. In addition, the manner in which
foreign investors may invest in securities in certain countries, as well as limitations on such
investments, may affect the investment operations of the Sub-funds.
19.15 Emerging country debt will be subject to high risk and will not be required to meet a minimum rating
standard and may not be rated for creditworthiness by any internationally recognised credit rating
organisation. The issuer or governmental authority that controls the repayment of an emerging
country's debt may not be able or willing to repay the principal and/or interest when due in accordance
with the terms of such debt. As a result of the foregoing, a government obligor may default on its
obligations. If such an event occurs, the Company may have limited legal recourse against the issuer
and/or guarantor. Remedies must, in some cases, be pursued in the courts of the defaulting party itself,
and the ability of the holder of foreign government debt securities to obtain recourse may be subject
to the political climate in the relevant country. In addition, no assurance can be given that the holders
of commercial debt will not contest payments to the holders of other foreign government debt
obligations in the event of default under their commercial bank loan agreements.
19.16 Settlement systems in emerging markets may be less well organised than in developed markets. Thus,
there may be a risk that settlement may be delayed and that cash or securities of the Sub-funds may be
in jeopardy because of failures or of defects in the systems. In particular, market practice may require
that payment will be made prior to receipt of the security which is being purchased or that delivery of
a security must be made before payment is received. In such cases, default by a broker or bank (the
Counterparty) through whom the relevant transaction is effected might result in a loss being suffered
by Sub-funds investing in emerging market securities.
19.17 The Company will seek, where possible, to use Counterparties whose financial status is such that this
risk is reduced. However, there can be no certainty that the Company will be successful in eliminating
this risk for the Sub-funds, particularly as Counterparties operating in emerging markets frequently
lack the substance or financial resources of those in developed countries.
19.18 There may also be a danger that, because of uncertainties in the operation of settlement systems in
individual markets, competing claims may arise in respect of securities held by or to be transferred to
the Sub-funds. Furthermore, compensation schemes may be non-existent or limited or inadequate to
meet the Company's claims in any of these events.
In some Eastern European countries there are uncertainties with regard to the ownership of properties.
As a result, investing in Transferable Securities issued by companies holding ownership of such
Eastern European properties may be subject to increased risk.
Risks in transactions in currencies
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19.19 In general, foreign exchange rates can be extremely volatile and difficult to predict. Foreign exchange
rates may be influenced by, among other factors: changing supply and demand for a particular
currency; trade, fiscal and monetary policies of governments (including exchange control programs,
restrictions on local exchanges or markets and limitations on foreign investment in a country or on
investment by residents of a country in other countries); political events; changes in balances of
payments and trade; domestic and foreign rates of inflation; domestic and foreign rates of interest;
international trade restrictions; and currency devaluations and revaluations. In addition, governments
from time to time intervene, directly and by regulation, in the currency markets to influence prices
directly. Variance in the degree of volatility of the market form the Management Company, the
Investment Manager and the Investment Adviser's expectations may produce significant losses to a
Sub-fund, particularly in the case of transactions entered into pursuant to non-directional strategies.
Nominee arrangements
19.20 The Company draws the investors' attention to the fact that any investor will only be able to fully
exercise his/her/its investor rights directly against the Company, in particular the right to participate
in general meetings of Shareholders, if the investor is registered himself/herself/itself and in his/her/its
own name in the Register. In cases where an investor invests in the Company through an intermediary
investing into the Company in his/her/its own name but on behalf of the investor, it may not always
be possible for the investor to exercise certain shareholder rights directly against the Company.
Investors are advised to take advice on their rights.
19.21 Use of EPM techniques
Securities lending involves counterparty or credit risk, namely the risk that counterparty to a lending
contract will not return, typically as a consequence of its insolvency, the securities lent by a sub-fund.
Moreover, the collateral received to mitigate the counterparty risk may be realized at a lower value
than the securities lent, whether due to adverse market movements, decrease in the credit rating of the
issuer of the collateral or the illiquidity of the market for the collateral at the time of the counterparty’s
default.
Repurchase agreement transactions may be subject to counterparty risk and/or credit risk. If the
counterparty defaults on its obligations, the Company may incur costs or lose money in exercising its
rights under the agreement. The counterparty’s credit risk is reduced by the delivery of collateral.
The liquidity risk relates to securities used as collateral. The liquidity risk is low with the government
bonds traded on the stock exchange or on the inter-bank market; on the contrary, with the low rating
shares and bonds the liquidity risk is higher. The Company may incur a loss in reinvesting the cash
collateral it receives. Such a loss may arise due to a decline in the value of the investment made with
cash collateral received. A decline in the value of such investment of the cash collateral would reduce
the amount of collateral available to be returned by the Company to the counterparty at the conclusion
of the transaction. The Company would be required to cover the difference in value between the
collateral originally received and the amount available to be returned to the counterparty, thereby
resulting in a loss to the Company. Furthermore in case of reinvestment of cash collateral such
reinvestment may create leverage with corresponding risks and risk of losses and volatility, introduce
market exposures inconsistent with the objectives of the Company, or yield a sum less than the amount
of collateral to be returned;
The risks arising from these techniques will be adequately captured by the risk management process
of the Management Company and will not add significant risks to the original investment policy of the
Company.
Use of financial derivative instruments
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19.22 While the prudent use of financial derivative instruments can be beneficial, derivatives also involve
risks different from, and, in certain cases, greater than, the risks presented by more traditional
investments. The following is a general discussion of important risk factors and issues concerning the
use of derivatives that investors should understand before investing in a Sub-fund.
Market risk
19.23 This is a general risk that applies to all investments meaning that the value of a particular derivative
may change in a way which may be detrimental to a Sub-fund's interests.
Control and monitoring
19.24 Derivative products are highly specialised instruments that require investment techniques and risk
analysis different from those associated with equity and fixed income securities. The use of derivative
techniques requires an understanding not only of the underlying assets of the derivative but also of the
derivative itself, without the benefit of observing the performance of the derivative under all possible
market conditions. In particular, the use and complexity of derivatives require the maintenance of
adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative
adds to a Sub-fund and the ability to forecast the relative price, interest rate or currency rate movements
correctly.
Liquidity risk
19.25 Liquidity risk exists when a particular instrument is difficult to purchase or sell. If a derivative
transaction is particularly large or if the relevant market is illiquid, it may not be possible to initiate a
transaction or liquidate a position at an advantageous price (however, the Company will only enter
into OTC Derivatives if it is allowed to liquidate such transactions at any time at fair value).
Counterparty risk
19.26 The Sub-funds may enter into transactions in OTC markets, which will expose the Sub-funds to the
credit of its counterparties and their ability to satisfy the terms of such contracts. For example, the Sub-
funds may enter into swap arrangements or other derivative techniques as specified in the relevant
Special Sections, each of which expose the Sub-funds to the risk that the counterparty may default on
its obligations to perform under the relevant contract. In the event of a bankruptcy or insolvency of a
counterparty, the Sub-funds could experience delays in liquidating the position and significant losses,
including declines in the value of its investment during the period in which the Company seeks to
enforce its rights, inability to realise any gains on its investment during such period and fees and
expenses incurred in enforcing its rights. There is also a possibility that the above agreements and
derivative techniques are terminated due, for instance, to bankruptcy, supervening illegality or change
in the tax or accounting laws relative to those at the time the agreement was originated. However this
risk is limited in view of the Investment Restrictions laid down in the Section 3 of the General Section.
19.27 Certain markets in which the Sub-funds held by the Sub-funds may effect their transactions are over-
the-counter or interdealer markets. The participants in such markets are typically not subject to credit
evaluation and regulatory oversight as are members of "exchange-based" markets. To the extent a Sub-
fund invests in swaps, derivative or synthetic instruments, or other over-the-counter transactions, on
these markets, such Sub-fund may take credit risk with regard to parties with whom it trades and may
also bear the risk of settlement default. These risks may differ materially from those entailed in
exchange-traded transactions which generally are backed by clearing organisation guarantees, daily
marking-to-market and settlement, and segregation and minimum capital requirements applicable to
intermediaries. Transactions entered directly between two counterparties generally do not benefit from
such protections. This exposes the Sub-funds to the risk that a counterparty will not settle a transaction
in accordance with its terms and conditions because of a dispute over the terms of the contract (whether
or not bona fide) or because of a credit or liquidity problem, thus causing the Sub-fund to suffer a loss.
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Such "counterparty risk" is accentuated for contracts with longer maturities where events may
intervene to prevent settlement, or where the Company has concentrated its transactions with a single
or small group of counterparties. In addition, in the case of a default, the respective Sub-fund could
become subject to adverse market movements while replacement transactions are executed. The Sub-
funds are not restricted from dealing with any particular counterparty or from concentrating any or all
of their transactions with one counterparty. Moreover, the Sub-funds have no internal credit function
which evaluates the creditworthiness of their counterparties. The ability of the Sub-funds to transact
business with any one or number of counterparties, the lack of any meaningful and independent
evaluation of such counterparties' financial capabilities and the absence of a regulated market to
facilitate settlement may increase the potential for losses by the Sub-funds.
Lack of availability
19.28 Because the markets for certain derivative instruments (including markets located in foreign countries)
are relatively new and still developing, suitable derivatives transactions may not be available in all
circumstances for risk management or other purposes. Upon the expiration of a particular contract, the
Management Company may wish to retain the respective Sub-fund's position in the derivative
instrument by entering into a similar contract, but may be unable to do so if the counterparty to the
original contract is unwilling to enter into the new contract and no other suitable counterparty can be
found. There is no assurance that the Sub-funds will engage in derivatives transactions at any time or
from time to time. The Sub-funds' ability to use derivatives may also be limited by certain regulatory
and tax considerations.
Synthetic Short Selling
19.29 Sub-funds may utilise synthetic short exposures through the use of cash settled derivatives such as
swaps, futures and forwards in order to enhance their overall performance. A synthetic short sale
position replicates the economic effect of a transaction in which a fund sells a security it does not own
but has borrowed, in anticipation that the market price of that security will decline. When a Sub-fund
initiates such a synthetic short position in a security that it does not own, it enters into a derivative-
based transaction with a counterparty or broker-dealer and closes that transaction on or before its
expiry date through the receipt or payment of any gains or losses resulting from the transaction. A Sub-
fund may be required to pay a fee to synthetically short particular securities and is often obligated to
pay over any payments received on such securities. Each Sub-fund maintains sufficiently liquid long
positions in order to cover any obligations arising from its short positions. If the price of the security
on which the synthetic short position is written increases between the time of the initiation of the
synthetic short position and the time at which the position is closed, the Sub-fund will incur a loss;
conversely, if the price declines, the Sub-fund will realise a short-term capital gain. Any gain will be
decreased and any loss increased by the transactional costs described above. Although a Sub-fund's
gain is limited to the price at which it opened the synthetic short position, its potential loss is
theoretically unlimited. Stop loss policies are typically employed to limit actual losses, which would
otherwise have to be covered by closing long positions.
Synthetic Leverage
19.30 A Sub-fund's portfolio may be leveraged by using derivative instruments (including OTC Derivatives)
i.e. as a result of its transactions in the futures, options and swaps markets. A low margin deposit is
required in futures trading and the low cost of carrying cash positions permit a degree of leverage,
which may result in exaggerated profits or losses to an investor. A relatively small price movement in
a futures position or the underlying instrument may result in substantial losses to the Sub-fund resulting
in a similar decline to the Net Asset Value per Share. The writer of an option is subject to the risk of
loss resulting from the difference between the premium received for the option and the price of the
futures contract or security underlying the option which the writer must purchase or deliver upon
exercise of the option. Contracts for differences and swaps may also be used to provide synthetic short
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exposure to a stock – the risks associated with using swaps and contract for differences are more fully
disclosed in Section 19.31 below.
Use of specific derivative contracts
19.31 The following only represents a limited choice of risks associated with derivatives the Sub-funds may
elect to invest in. The Sub-funds are substantially unrestricted in their use of derivatives and may
decide to use various other derivatives contracts associated with much higher or different risks, as the
case may be.
(a) Swap agreements
Sub-funds may enter into swap agreements. Swap agreements can be individually
negotiated and structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap agreements may
increase or decrease the Sub-funds' exposure to long-term or short-term interest rates,
different currency values, corporate borrowing rates, or other factors such as without
limitation security prices, baskets of equity securities or inflation rates. Swap
agreements can take many different forms and are known by a variety of names. The
Sub-funds are not limited to any particular form of swap agreement if consistent with
the respective Sub-fund's investment objective and policies. Swap agreements tend to
shift the respective Sub-fund's investment exposure from one type of investment to
another. Depending on how they are used, swap agreements may increase or decrease
the overall volatility of the Sub-funds' portfolio. The most significant factor in the
performance of swap agreements is the change in the specific interest rate, currency,
individual equity values or other factors that determine the amounts of payments due
to and from the Sub-funds.
Inter alia, in order to seek to reduce the interest rate risk inherent in the Sub-funds
underlying investments especially associated with bonds and other fixed income
investments, the Sub-funds may employ interest rate swaps or option transactions.
Interest rate swaps involve the Sub-funds' agreement with the swap counterparty to
pay a variable rate payment on a notional amount in exchange for the counterparty
paying the Sub-funds a fixed rate payment on a notional amount that is intended to
approximate the Sub-funds income on variable interest rates.
The use of interest rate swaps and options is a highly specialised activity that involves
investment techniques and risks different from those associated with ordinary
portfolio security transactions. Depending on the state of interest rates, the respective
Sub-fund's use of interest rate instruments could enhance or harm the overall
performance on the Shares in the respective Sub-fund. To the extent there is an
increase in interest rates, the value of the interest rate swap or option could go down,
and could result in a decline in the Net Asset Value of the Shares. If interest rates are
higher than the respective Sub-fund's fixed rate of payment on the interest rate swap,
the swap will reduce the net earnings. If, on the other hand, interest rates are lower
than the fixed rate of payment on the interest rate swap, the swap will enhance net
earnings.
Interest rate swaps and options generally do not involve the delivery of securities or
other underlying assets or principal. Accordingly, the risk of loss with respect to
interest rate swaps or options is limited to the net amount of interest payments that the
Sub-funds are contractually obligated to make.
In addition, at the time the interest rate swap or option transaction reaches its
scheduled termination date, there is a risk that the Sub-funds will not be able to obtain
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a replacement transaction or that the terms of the replacement will not be as favourable
as the terms of the expiring transactions. If this occurs, it could have a negative impact
on the performance of the Shares in the respective Sub-fund.
(b) Call options
There are risks associated with the sale and purchase of call options. The seller (writer)
of a call option that is covered (e.g., the writer holds the underlying security) assumes
the risk of a decline in the market price of the underlying security below the purchase
price of the underlying security offset by the gain by the premium received if the
option expires out of the money, and gives up the opportunity for gain on the
underlying security above the exercise price of the option. If the seller of the call
option owns a call option covering an equivalent number of shares with an exercise
price equal to or less than the exercise price of the call written, the position is "fully
hedged" if the option owned expires at the same time or later than the option written.
The seller of an uncovered, unhedged call option assumes the risk of a theoretically
unlimited increase in the market price of the underlying security above the exercise
price of the option. The buyer of a call option assumes the risk of losing its entire
investment in the call option. If the buyer of the call sells short the underlying security,
the loss on the call will be offset in whole or in part by any gain on the short sale of
the underlying security (if the market price of the underlying security declines).
(c) Put options
There are risks associated with the sale and purchase of put options. The seller (writer)
of a put option that is covered (e.g., the writer has a short position in the underlying
security) assumes the risk of an increase in the market price of the underlying security
above the sale price of the short position of the underlying security offset by the
premium if the option expires out of the money, and thus the gain in the premium, and
the option seller gives up the opportunity for gain on the underlying security below
the exercise price of the option. If the seller of the put option owns a put option
covering an equivalent number of shares with an exercise price equal to or greater
than the exercise price of the put written, the position is "fully hedged" if the option
owned expires at the same time or later than the option written. The seller of an
uncovered, unhedged put option assumes the risk of a decline in the market price of
the underlying security to zero.
The buyer of a put option assumes the risk of losing his entire investment in the put
option. If the buyer of the put holds the underlying security, the loss on the put will
be offset in whole or in part by any gain on the underlying security.
(d) Forward trading
Each Sub-fund may invest in forward contracts and options thereon, which, unlike
futures contracts, are not traded on exchanges, and are not standardised; rather, banks
and dealers act as principals in these markets, negotiating each transaction on an
individual basis. Forward and "cash" trading is substantially unregulated; there is no
limitation on daily price movements and speculative position limits are not applicable.
For example, there are no requirements with respect to record-keeping, financial
responsibility or segregation of customer funds or positions. In contrast to exchange-
traded futures contracts, interbank traded instruments rely on the fulfilment by the
dealer or counterparty of its contract. As a result, trading in unregulated exchange
contracts may be subject to more risks than futures or options trading on regulated
exchanges, including, but not limited to, the risk of default due to the failure of a
counterparty with which the respective Sub-fund has forward contracts. Although the
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Board seeks to trade with responsible counterparties, failure by a counterparty to fulfil
its contractual obligation could expose the Company to unanticipated losses. The
principals who deal in the forward markets are not required to continue to make
markets in the currencies or commodities they trade and these markets can experience
periods of illiquidity, sometimes of significant duration. There have been periods
during which certain participants in these markets have refused to quote prices for
certain currencies or commodities or have quoted prices with an unusually wide
spread between the price at which they were prepared to buy and that at which they
were prepared to sell. Disruptions can occur in any market traded by the Sub-funds
due to unusually high or low trading volume, political intervention or other factors.
The imposition of credit controls by government authorities might also limit such
forward trading to less than that which the Management Company would otherwise
recommend, to the possible detriment of the Sub-funds.
(e) Performance swaps, interest rate swaps, currency swaps, total return swaps, credit
default swaps and interest rate swaptions.
The Company, the Management Company or the Investment Manager may, as a part
of the investment strategy of a Sub-fund, enter into performance swaps, interest rate
swaps, currency swaps, total return swaps, credit default swaps and interest rate
swaptions agreements. Interest rate swaps involve the exchange by a Sub-fund with
another party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps may
involve the exchange of rights to make or receive payments in specified currencies.
Total return swaps involve the exchange of the right to receive the total return,
coupons plus capital gains or losses, of a specified reference asset, index or basket of
assets against the right to make fixed or floating payments.
Where a Sub-fund enters into interest rate swaps or total return swaps on a net basis,
the two payment streams are netted out, with each Sub-fund receiving or paying, as
the case may be, only the net amount of the two payments. Interest rate swaps or total
return swaps entered into on a net basis do not involve the physical delivery of
investments, other underlying assets or principal. Accordingly, it is intended that the
risk of loss with respect to interest rate swaps is limited to the net amount of interest
payments that the Sub-fund is contractually obligated to make (or in the case of total
return swaps, the net amount of the difference between the total rate of return of a
reference investment, index or basket of investments and the fixed or floating
payments). If the other party to an interest rate swap or total return swap defaults, in
normal circumstances the Sub-fund's risk of loss consists of the net amount of interest
or total return payments that the Sub-fund is contractually entitled to receive. In
contrast, currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency. Therefore, the
entire principal value of a currency swap is subject to the risk that the other party to
the swap will default on its contractual delivery obligations.
A Sub-fund may use credit default swaps. A credit default swap is a bilateral financial
contract in which one counterparty (the protection buyer) pays a periodic fee in return
for a contingent payment by the protection seller following a credit event of a
reference issuer. The protection buyer must either sell particular obligations issued by
the reference issuer for its par value (or some other designated reference or strike
price) when a credit event (such as bankruptcy or insolvency) occurs or receive a cash
settlement based on the difference between the market price and such reference price.
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A Sub-fund may use credit default swaps in order to hedge the specific credit risk of
some of the issuers in its portfolio by buying protection. In addition, a Sub-fund may
buy protection under credit default swaps without holding the underlying assets.
A Sub-fund may also sell protection under credit default swaps in order to acquire a
specific credit exposure.
A Sub-fund may also purchase a receiver or payer interest rate swaption contract.
Swaptions are options on interest rate swaps. These give the purchaser the right, but
not the obligation to enter into an interest rate swap at a preset interest rate within a
specified period of time. The interest rate swaption buyer pays a premium to the seller
for this right. A receiver interest rate swaption gives the purchaser the right to receive
fixed payments in return for paying a floating rate of interest. A payer interest rate
swaption would give the purchaser the right to pay a fixed rate of interest in return for
receiving a floating rate payment stream.
The use of interest rate swaps, currency swaps, total return swaps, credit default swaps
and interest rate swaptions is a highly specialised activity which involves investment
techniques and risks different from those associated with ordinary portfolio securities
transactions. If the Board, the Management Company or the Investment Manager is
incorrect in its forecasts of market values, interest rates and currency exchange rates,
the investment performance of the Sub-fund would be less favourable than it would
have been if these investment techniques were not used.
(f) Contracts for differences
The Sub-funds may have an exposure in Contracts For Difference (CFDs). CFD's are
synthetic instruments which mirror the profit (or loss) effect of holding (or selling)
equities directly without buying the actual securities themselves. A CFD on a
company's shares will specify the price of the shares when the contract was started.
The contract is an agreement to pay out cash on the difference between the starting
share price and the share price when the contract is closed. Accordingly, under such
an instrument the relevant Sub-fund will make a profit if it has a purchase position
and the price of the underlying security rises (and make a loss if the price of the
underlying security falls). Conversely if the Sub-fund has a sale position, it will make
a profit if the price of the underlying security falls (and make a loss if the price of the
underlying security rises). As part of the normal market terms of trade the Company
must comply with market participants terms and conditions and in particular initial
margin has to be paid to cover potential losses (on set up) and variation margin on
adverse price movements (during the term of the CFD). In addition it should be noted
the relevant Sub-fund could suffer losses in event of the CFD issuer's default or
insolvency.
(g) Other derivative instruments.
The Sub-funds may take advantage of opportunities with respect to certain other
derivative instruments that are not presently contemplated for use or that are currently
not available, but that may be developed, to the extent such opportunities are both
consistent with the investment objective of the Sub-funds and legally permissible.
Special risks may apply to instruments that are invested in by the Company in the
future that cannot be determined at this time or until such instruments are developed
or invested in by the Sub-funds. Certain swaps, options and other derivative
instruments may be subject to various types of risks, including market risk, liquidity
risk, the risk of non-performance by the counterparty, including risks relating to the
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financial soundness and creditworthiness of the counterparty, legal risk and operations
risk.
Risks of options trading
19.32 In seeking to enhance performance or hedge assets, the Sub-fund may use options. Both the purchasing
and selling of call and put options entail risks. Although an option buyer's risk is limited to the amount
of the purchase price of the option, an investment in an option may be subject to greater fluctuation
than an investment in the underlying securities. In theory, an uncovered call writer's loss is potentially
unlimited, but in practice the loss is limited by the term of existence of the call. The risk for a writer
of a put option is that the price of the underlying security may fall below the exercise price.
Investing in futures is volatile and involves a high degree of leverage
19.33 Futures markets are highly volatile markets. The profitability of the Sub-fund will partially depend on
the ability of the Board, the Management Company or the Investment Manager to make a correct
analysis of the market trends, influenced by governmental policies and plans, international political
and economical events, changing supply and demand relationships, acts of governments and changes
in interest rates. In addition, governments may from time to time intervene on certain markets,
particularly currency markets. Such interventions may directly or indirectly influence the market.
Given that only a small amount of margin is required to trade on futures markets, the operations of the
managed futures portion of the Sub-fund shall be characterised by a high degree of leverage. As a
consequence, a relatively small variation of the price of a futures contract may result in substantial
losses for the Sub-fund and a correlated reduction of the Net Asset Value of the Shares of the Sub-
fund.
Futures markets may be illiquid
19.34 Most futures markets limit fluctuation in futures contracts prices during a single day. When the price
of a futures contract has increased or decreased by an amount equal to the daily limit, positions can be
neither taken nor liquidated unless the Board, the Management Company or the Investment Manager
are willing to trade at or within the limit. In the past futures contracts prices have exceeded the daily
limit for several consecutive days with little or no trading. Similar occurrences could prevent the Sub-
fund from promptly liquidating unfavourable positions and thus subject the Sub-fund to substantial
losses. In addition, even if the prices do not get close to such limits, the Sub-fund may be in a position
not to obtain satisfying prices if the volumes traded on the market are insufficient to meet liquidation
requests. It is also possible that a stock exchange, the Commodity Futures Trading Commission in the
United States or another similar institution in another country suspends the listing of a particular
contract, instructs the immediate liquidation of the contract or limits transactions on a contract to the
sole transactions against delivery.
Options on futures
19.35 The Company, the Management Company or the Investment Manager may engage in the management
of options, in particular options on futures contracts. Such management carries risks similar to the risks
inherent to the uncovered management of futures contracts on commodities as far as such options are
volatile and imply a high degree of leverage. The specific movements of the commodities and futures
contracts markets, which represent the underlying assets of the options may not be predicted with
precision. The buyer of an option may lose the entire purchase price of the option. The seller of an
option may lose the difference between the premium received for the option and the price of the
commodity or of the futures contract underlying the option that the seller must buy or deliver, upon
the exercise of the option.
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Other risks
19.36 Other risks in using derivatives include the risk of differing valuations of derivatives arising out of
different permitted valuation methods and the inability of derivatives to correlate perfectly with
underlying securities, rates and indices. Many derivatives, in particular OTC Derivatives, are complex
and often valued subjectively and the valuation can only be provided by a limited number of market
professionals which often are acting as counterparties to the transaction to be valued. Inaccurate
valuations can result in increased cash payment requirements to counterparties or a loss of value to a
Sub-fund. However, this risk is limited as the valuation method used to value OTC Derivatives must
be verifiable by an independent auditor.
19.37 Derivatives do not always perfectly or even highly correlate or track the value of the securities, rates
or indices they are designed to track. Consequently, a Sub-fund's use of derivative techniques may not
always be an effective means of, and sometimes could be counterproductive to, following a Sub-fund's
Investment Objective.
Fixed-interest securities
19.38 Investment in securities of issuers from different countries and denominated in different currencies
offer potential benefits not available from investments solely in securities of issuers from a single
country, but also involve certain significant risks that are not typically associated with investing in the
securities of issuers located in a single country. Among the risks involved are fluctuations in currency
exchange rates and the possible imposition of exchange control regulations or other laws or restrictions
applicable to such investments. A decline in the value of a particular currency in comparison with the
reference currency of the Company would reduce the value of certain portfolio securities that are
denominated in the former currency. The following risks may also be associated with fixed-interest
securities:
(a) Issuers are generally subject to different accounting, auditing and financial reporting standards
in different countries throughout the world. The volume of trading, volatility of prices and
liquidity of issuers may differ between the markets of different countries. In addition, the level
of government supervision and regulation of securities exchanges, securities dealers and listed
and unlisted companies differs from one country to another. The laws of some countries may
limit the Company 's ability to invest in securities of certain issuers.
(b) Different markets also have different clearing and settlement procedures. Delays in settlement
could result in temporary periods when a portion of the assets of a Sub-fund is uninvested and
no return is earned thereon. The inability of the Company to make intended security purchases
due to settlement problems could cause a Sub-fund to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to settlement problems could result either in
losses to a Sub-fund due to subsequent declines in value of the portfolio security or, if a Sub-
fund has entered into a contract to sell the security, could result in possible liability to the
purchaser.
(c) An issuer of securities may be domiciled in a country other than the country in whose currency
the instrument is denominated. The values and relative yields of investments in the securities
markets of different countries, and their associated risks, may fluctuate independently of each
other.
High-yield securities
19.39 Sub-funds may invest in high-yield securities. Such securities are generally not exchange traded and,
as a result, these instruments trade in a smaller secondary market than exchange-traded bonds. In
addition, each Sub-fund may invest in bonds of issuers that do not have publicly traded equity
securities, making it more difficult to hedge the risks associated with such investments (neither Sub-
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fund is required to hedge, and may choose not to do so). High-yield securities that are below investment
grade or unrated face ongoing uncertainties and exposure to adverse business, financial or economic
conditions which could lead to the issuer's inability to meet timely interest and principal payments.
The market values of certain of these lower-rated and unrated debt securities tend to reflect individual
corporate developments to a greater extent than do higher-rated securities, which react primarily to
fluctuations in the general level of interest rates, and tend to be more sensitive to economic conditions
than are higher-rated securities. Companies that issue such securities are often highly leveraged and
may not have available to them more traditional methods of financing. It is possible that a major
economic recession could disrupt severely the market for such securities and may have an adverse
impact on the value of such securities. In addition, it is possible that any such economic downturn
could adversely affect the ability of the issuers of such securities to repay principal and pay interest
thereon and increase the incidence of default of such securities.
Contingent Convertible Securities
19.40 Sub-funds may invest in contingent convertible securities (“CoCos”) which are debt securities paying
a higher coupon and which may be converted into equity securities or suffer capital losses if certain
specified events occur (“trigger events”), depending in particular on the capital ratio levels of the issuer
of such CoCos (“trigger levels”). CoCos are complex financial instruments which trigger levels and
thus exposure to conversion risk differ widely. They are also innovative financial instruments and their
behaviour under a stressed financial environment is thus unknown. This increases uncertainty in the
valuation of CoCos and the risks of potential price contagion and volatility of the entire CoCos asset
class, in particular as it still remains unclear whether holders of CoCos have fully considered the
underlying risks of these instruments. Investment in CoCos may result in material losses to the relevant
Sub-fund. Following certain trigger events, including an issuer's capital ratio falling below a particular
level, the debt security may be converted into the issuer's equity or suffer capital losses. In certain
scenarios, holders of CoCos will suffer losses ahead of holders of equity securities issued by the same
issuer, contrary to the classic order of capital structure hierarchy where equity holders are expected to
suffer the loss before debt holders. Some CoCos are also subject to the risk of discretionary
cancellation of coupon payments by the issuer at any point, for any reason, and for any length of time.
CoCos are issued as perpetual instruments and it cannot be assumed that the perpetual CoCos will be
called on call date.
Real estate investment trusts
19.41 Certain Sub-funds may invest in real estate investment trusts (REITs), which are instruments that offer
the opportunity to invest in a professionally managed portfolio of real estate through the purchase of a
publicly-traded investment product. Investments in REITs are generally performed by purchasing units
of the trust. The investment objective of REITs is to provide investors with dividend income, usually
from rental income, and capital gains from the sale of real estate assets. Some of the risks associated
with investing in REITs include (a) market risks: the value of units in publicly traded REITs can
fluctuate and investors may receive less than the original purchase price; (b) income risk: dividends
may not be paid if a REIT incurs in operating losses; (c) concentration risk: if a substantial portion of
the REIT’s assets are invested in few properties (d) liquidity risk: a real estate fund may be relatively
less liquid compared to funds investing in financial securities such as stocks and bonds;
Equities
19.42 The risks associated with investments in equity (and equity-type) securities include significant
fluctuations in market prices, adverse issuer or market information and the subordinate status of equity
in relation to debt paper issued by the same company. Potential investors should also consider the risk
attached to fluctuations in exchange rates, possible imposition of exchange controls and other
restrictions.
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Use of structured finance securities
19.43 Structured finance securities include, without limitation, securitised credit and portfolio credit-linked
notes.
19.44 Securitised credit is securities primarily serviced, or secured, by the cash flows of a pool of receivables
(whether present or future) or other underlying assets, either fixed or revolving. Such underlying assets
may include, without limitation, residential and commercial mortgages, leases, credit card receivables
as well as consumer and corporate debt. Securitised credit can be structured in different ways,
including "true sale" structures, where the underlying assets are transferred to a special purpose entity,
which in turn issues the asset-backed securities, and "synthetic" structures, in which not the assets, but
only the credit risks associated with them are transferred through the use of derivatives, to a special
purpose entity, which issues the securitised credit.
19.45 Portfolio credit-linked notes are securities in respect of which the payment of principal and interest is
linked directly or indirectly to one or more managed or unmanaged portfolios of reference entities
and/or assets ("reference credits"). Upon the occurrence of a credit-related trigger event ("credit
event") with respect to a reference credit (such as a bankruptcy or a payment default), a loss amount
will be calculated (equal to, for example, the difference between the par value of an asset and its
recovery value).
19.46 Securitised credit and portfolio credit-linked notes are usually issued in different tranches: Any losses
realised in relation to the underlying assets or, as the case may be, calculated in relation to the reference
credits are allocated first to the securities of the most junior tranche, until the principal of such
securities is reduced to zero, then to the principal of the next lowest tranche, and so forth.
19.47 Accordingly, in the event that (a) in relation to securitised credit, the underlying assets do not perform
and/or (b) in relation to portfolio credit-linked notes, any one of the specified credit events occurs with
respect to one or more of the underlying assets or reference credits, this may affect the value of the
relevant securities (which may be zero) and any amounts paid on such securities (which may be zero).
This may in turn affect the Net Asset Value per Share In addition the value of structured finance
securities from time to time, and consequently the Net Asset Value per Share, may be adversely
affected by macro economic factors such as adverse changes affecting the sector to which the
underlying assets or reference credits belong (including industry sectors, services and real estate),
economic downturns in the respective countries or globally, as well as circumstances related to the
nature of the individual assets (for example, project finance loans are subject to risks connected to the
respective project). The implications of such negative effects thus depend heavily on the geographic,
sector-specific and type-related concentration of the underlying assets or reference credits. The degree
to which any particular asset-backed security or portfolio credit-linked note is affected by such events
will depend on the tranche to which such security relates; junior tranches, even having received
investment grade rating, can therefore be subject to substantial risks.
19.48 Exposure to structured finance securities may entail a higher liquidity risk than exposure to sovereign
bonds which may affect their realisation value.
Financial failure of intermediaries
19.49 There is always the possibility that the institutions, including brokerage firms and banks, with which
the Sub-funds do business, or to which securities have been entrusted for custodial purposes, will
encounter financial difficulties that may impair their operational capabilities or result in losses to the
Company.
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Specific restrictions in connection with the Shares
19.50 Investors should note that there may be restrictions in connection with the subscription, holding and
trading in the Shares. Such restrictions may have the effect of preventing the investor from freely
subscribing, holding or transferring the Shares. In addition to the features described below, such
restrictions may also be caused by specific requirements such as a Minimum Subscription Amount or
due to the fact that certain Sub-funds may be closed to additional subscriptions after the Initial Offering
Period or Initial Offering Date.
Taxation
19.51 Shareholders should be aware that they may be required to pay income tax, withholding tax, capital
gains tax, wealth tax, stamp taxes or any other kind of tax on distributions or deemed distributions of
a Sub-fund, capital gains within a Sub-fund, whether or not realised, income received or accrued or
deemed received within a Sub-fund etc., and this will be according to the laws and practices of the
country where the Shares are purchased, sold, held or redeemed and in the country of residence or
nationality of the Shareholder.
19.52 Shareholders should be aware of the fact that they might have to pay taxes on income or deemed
income received by or accrued within a Sub-fund. Taxes might be calculated based on income received
and/or deemed to be received and/or accrued in a Sub-fund in relation to their direct investments,
whereas the performance of a Sub-fund, and subsequently the return Shareholders receive after
redemption of the Shares, might partially or fully depend on the performance of underlying assets.
This can have the effect that the investor has to pay taxes for income or/and a performance which he
does not, or does not fully, receive.
19.53 Shareholders who are in any doubt as to their tax position should consult their own independent tax
advisers. In addition, Shareholders should be aware that tax regulations and their application or
interpretation by the relevant taxation authorities change from time to time. Accordingly, it is not
possible to predict the precise tax treatment, which will apply at any given time.
Change of law
19.54 The Company must comply with regulatory constraints, such as a change in the laws affecting the
Investment Restrictions and limits applicable to UCITS, which might require a change in the
Investment Policy and Investment Objective followed by a Sub-fund.
Performance allocation and fees
19.55 Certain Sub-funds may provide for the right of the Management Company or the Investment Manager
to receive a performance fee or similar remuneration schemes. The fact that the remuneration is based
on the performance of the relevant Sub-fund may create an incentive for the Management Company
or the relevant Service Provider to cause the Sub-fund to make Investments that are more speculative
than would be the case in the absence of performance-based compensation. However, such incentive
may be tempered somewhat by the fact that losses will reduce the Sub-fund's performance and thus
the Management Company or Investment Manager's performance fee or similar remuneration scheme.
Political factors
19.56 The performance of the Shares or the possibility to purchase, sell, or redeem may be affected by
changes in general economic conditions and uncertainties such as political developments, changes in
government policies, the imposition of restrictions on the transfer of capital and changes in regulatory
requirements.
19.57 Potential UK exit from the European Union
75
The UK Government has announced a referendum which was held on 23 June 2016 to decide whether
the UK should remain in the EU. The outcome of the referendum was in favour of the UK leaving the
EU (“Brexit”), which could have a significant impact on the Company. The extent of the impact would
depend in part on the nature of the arrangements (if any) that are put in place between the UK and the
EU following Brexit and the extent to which the UK continues to apply laws that are based on EU
legislation. In addition, the macroeconomic effect of a Brexit is unknown, as such, it is not possible to
state the impact that Brexit would have on the Company and its investments. Brexit could also
potentially make it more difficult for the Company to raise capital or distribute its Sub-Funds in the
EU and/or increase the regulatory compliance burden on the Company. This could restrict the
Company’s future activities and thereby negatively affect returns.
20. Soft commissions
20.1 The Management Company (or its delegates, including, e.g., Investment Managers) may enter into
soft commissions with brokers under which certain business services are obtained from third parties
and are paid for by the brokers out of the commissions they receive from transactions of the Company.
Consistent with obtaining best execution, brokerage commissions on portfolio transactions for the
Company may be directed by the Management Company (or its delegates) to broker-dealers in
recognition of research services furnished by them as well as for services rendered in the execution of
orders by such broker-dealers. The entering into soft commission arrangements is subject to the
following conditions: (i) the Management Company (and its delegates) will act at all times in the best
interest of the Company; (ii) the services provided will be in direct relationship to the activities of the
Management Company (or its delegates) and will assist the Management Company (or its delegates)
in providing a better service to the Company; (iii) brokerage commissions on portfolio transactions for
the Company will be directed by the Management Company (or its delegates) to broker-dealers that
are entities and not to individuals; (iv) any Investment Manager will provide reports to the
Management Company (and the Management Company will in turn provide reports to the Company)
with respect to soft commissions including the nature of the services it receives; and (v) information
concerning the soft commission arrangements will be disclosed in the financial statements of the
Company.
20.2 For greater clarity, the following are specifically excluded from the goods and services that can be
received in relation to soft commission arrangements: travel, costs, entertainment, current goods and
services connected with the management (except such goods and services as consultancy and research,
information technology material associated with specialist software, performance methods and
instruments for setting prices), the offices, the office equipment except the equipment related to
research or brokerage services, staff costs, clerical salaries and other costs determined to be overhead
expenses (such as electric bills, water bills, carpeting etc.).
20.3 The Management Company (or its delegates) or anyone connected to it will not personally benefit
from any financial return on the commissions collected by brokers or dealers. Any rebate, profit or
financial payment received by the Management Company (or its delegates) or anyone connected to it,
due on these brokerage commissions or transactions in relation to past orders for the Company, will
be exclusively paid into the relevant Sub-fund.
21. Conflicts of interests
21.1 The Directors, the Management Company, the Distributor(s), the Investment Manager(s), the
Investment Adviser(s), the Depositary and the Administrative Agent may, in the course of their
business, have potential conflicts of interests with the Company. Each of the Directors, the
Management Company, the Distributor(s), the Investment Manager(s), the Investment Adviser(s), the
Depositary and the Administrative Agent will have regard to their respective duties to the Company
and other persons when undertaking any transactions where conflicts or potential conflicts of interest
may arise. In the event that such conflicts do arise, each of such persons has undertaken or shall be
requested by the Company to undertake to use its reasonable endeavours to resolve any such conflicts
76
of interest fairly (having regard to its respective obligations and duties) and to ensure that the Company
and the Shareholders are fairly treated.
Interested dealings
21.2 The Directors, the Management Company, the Distributor(s), the Investment Manager(s), the
Investment Adviser(s), the Depositary and the Administrative Agent and any of their respective
subsidiaries, affiliates, associates, agents, directors, officers, employees or delegates (together the
Interested Parties and, each, an Interested Party) may:
(a) contract or enter into any financial, banking or other transaction with one another or with the
Company including, without limitation, investment by the Company, in securities in any
company or body any of whose investments or obligations form part of the assets of the
Company or any Sub-fund, or be interested in any such contracts or transactions;
(b) invest in and deal with Shares, securities, assets or any property of the kind included in the
property of the Company for their respective individual accounts or for the account of a third
party; and
(c) deal as agent or principal in the sale, issue or purchase of securities and other investments to,
or from, the Company through, or with, the Management Company, the Investment Manager
or the Depositary or any subsidiary, affiliate, associate, agent or delegate thereof.
21.3 Any assets of the Company in the form of cash may be invested in certificates of deposit or banking
investments issued by any Interested Party. Banking or similar transactions may also be undertaken
with or through an Interested Party (provided it is licensed to carry out this type of activities).
21.4 There will be no obligation on the part of any Interested Party to account to Shareholders for any
benefits so arising and any such benefits may be retained by the relevant party.
21.5 Any such transactions must be carried out as if effected on normal commercial terms negotiated at
arm's length.
21.6 Notwithstanding anything to the contrary herein and unless otherwise provided for in a Special Section
for a particular Sub-fund, the Management Company and/or the Investment Manager(s) or Investment
Adviser(s) (if any) and their respective Affiliates may actively engage in transactions on behalf of
other investment funds and accounts which involve the same securities and instruments in which the
Sub-funds will invest. The Management Company and/or the Investment Manager(s) or Investment
Adviser(s) (if any) and their respective Affiliates may provide investment management/advisory
services to other investment funds and accounts that have investment objectives similar or dissimilar
to those of the Sub-funds and/or which may or may not follow investment programs similar to the Sub-
funds, and in which the Sub-funds will have no interest. The portfolio strategies of the Management
Company and/or the Investment Manager(s) or Investment Adviser(s) (if any) and their respective
Affiliates used for other investment funds or accounts could conflict with the transactions and
strategies advised by the Management Company and/or the Investment Manager(s) or Investment
Adviser(s) (if any) in managing a Sub-fund and affect the prices and availability of the securities and
instruments in which such Sub-fund invests.
21.7 The Management Company and/or the Investment Manager(s) or Investment Adviser(s) (if any) and
their respective Affiliates may give advice or take action with respect to any of their other clients which
may differ from the advice given or the timing or nature of any action taken with respect to investments
of a Sub-fund. The Management Company and/or the Investment Manager(s) or Investment Adviser(s)
(if any) have no obligation to advise any investment opportunities to a Sub-fund which they may advise
to other clients.
77
21.8 The Management Company and/or the Investment Manager(s) or Investment Adviser(s) (if any) will
devote as much of their time to the activities of a Sub-fund as they deem necessary and appropriate.
The Management Company and/or the Investment Manager(s) or Investment Adviser(s) (if any) and
their respective Affiliates are not restricted from forming additional investment funds, from entering
into other investment advisory/management relationships, or from engaging in other business
activities, even though such activities may be in competition with a Sub-fund. These activities will not
qualify as creating a conflict of interest.
21.9 Additional considerations relating to conflicts of interest may be applicable, as the case may be, for a
specific Sub-fund further laid down in the relevant Special Section.
78
SPECIAL SECTION I – Alpha UCITS SICAV – Amber Equity Fund
This Special Section must be read in conjunction with the General Section of the Prospectus. This Special Section
refers only to the Alpha UCITS SICAV – Amber Equity Fund (the AE Fund or the Sub-fund).
Investment Objective The Investment Objective of the AE Fund is to achieve consistent absolute returns on its
assets.
Investment Strategy The AE Fund has a broad and flexible investment approach to achieving its investment
objective. The AE Fund will invest primarily in European equities, with a focus on Italian
investments using a fundamental value and bottom-up approach. The investment strategies
employed may encompass, among other things, any or all of the following strategies:
directional long or short positions with or without a catalyst; long/short equity pairs with or
without a catalyst; capital structure arbitrage; risk arbitrage; share class arbitrage; company
holding discounts; and relative- and fundamental-value. Short positions can only be
implemented via financial derivatives.
Investment Policy The AE Fund intends to accomplish its investment objective by investing, either directly or
through the use of financial derivative instruments, in equity securities. Issuers of these
securities may be located in any country, but will primarily be domiciled in, or carrying out
the main part of their economic activity in, a European country. The AE Fund uses an
investment process that is based on the fundamental analysis of the corporate issuers.
The AE Fund will invest in financial derivative instruments to achieve its investment
objective and for the purposes of hedging. These instruments may include, but are not limited
to, futures, options, contracts for difference, total return swaps, forward contracts on financial
instruments and options on such contracts, credit linked instruments, swap contracts by
private agreement and other fixed income, currency and credit derivatives.
The AE Fund may invest in debt securities, cash and cash equivalents, units of UCITs and
UCIs, including money market funds, and in assets denominated in any currency. All
investments will be made in accordance with the limits set out in the Prospectus. When
required by the conditions on the financial markets, the sub-fund may invest all its assets in
term deposits or money market instruments in order to protect investors' interests.
Global Exposure The Sub-fund will use the absolute Value-at-Risk (VaR) methodology to monitor its global
exposure.
The leverage of the Sub-fund (calculated as the sum of the notionals of the financial
derivative instruments used) is expected to range between 100% and 350% of the Sub-fund's
NAV including currency derivatives used for hedging purposes and is expected to range
between 100% and 250% of the Sub-fund’s NAV excluding currency derivatives for hedging
purposes. These ranges are not meant to be binding limits. In exceptional circumstances, the
leverage of the Sub-fund may be higher due to additional hedging requirements.
Additional Investment
Restrictions
In addition to the Investment Restrictions set out in Section 3 of the General Section, the AE
Fund will not invest more than 10% of its assets in UCIs or UCITS.
79
Investment Manager The Management Company has entered into an investment management agreement (the
Investment Management Agreement) with Amber Capital Italia SGR S.p.A. (the
Investment Manager), with registered offices in Milan, Piazzetta del Carmine 4, an
investment management company ("SGR") authorised by the Bank of Italy and registered
with number 285 in the Book held by the Bank of Italy pursuant to art. 35 of Law Decree n.
58 of 24 February 1998 (hereunder "D.Lgs 58/98"). The Investment Management Agreement
is governed by Luxembourg law and is entered into for an unlimited period of time.
Amber Capital Italia SGR S.p.A has been appointed as Investment Manager with full
discretion, subject to the overall review and control of the Management Company, to manage
and invest the assets of the Sub-fund in accordance with the Investment Objectives,
Investment Policy and Investment Restrictions set out in this Prospectus.
The Investment Management Agreement may be terminated by either party upon a six
months' written notice. It may be terminated without notice in certain circumstances as set
out in the Investment Management Agreement.
Launch Date 1st October 2013.
Term Infinite.
Initial Offering Period The Initial Offering Period of the AE Fund was set from the 1st October 2013 to the 2nd of
October 2013 until 3 p.m. (Luxembourg Time), with first technical NAV calculated the 3rd
of October 2013 with value date the 2nd October 2013. The Initial Subscription Price per
Share was EUR 1,000 or equivalent in any other Reference Currency of any Class.
Business Day Means each Luxembourg Banking Day.
Transaction Day Every Wednesday. Should a Wednesday not be Business Day, the following day which is a
Business Day. The Net Asset Value per Share will be determined unofficially each Business
Day, for the purpose of the Sub-fund’s daily pricing and performance monitoring,
notwithstanding the weekly Transaction Day.
Subscription Process Subscription requests for Shares of the AE Fund can be made to the Administrative Agent
on any day that is a Transaction Day starting as of the Launch Date or the Class Launch Date.
Subscription requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Subscription Cut-Off Time)
two Business Days before the relevant Transaction Day at the latest. Subscription requests
(i) from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees
may also be submitted by swift or fax. Any applications for subscriptions received after the
Subscription Cut-Off Time will be valid for the following Transaction Day.
Subscriptions may be made only by investors who are not Restricted Persons by delivering
to the account of the Depositary cleared funds for the full amount of the subscription price
(plus any Subscription Fee if applicable) of the Shares being subscribed for pursuant to the
subscription request, (i) with respect to subscriptions from Institutional Investors, within 3
80
Business Days following the relevant Transaction Day, (ii) with respect to subscriptions
through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days following the
relevant Transaction Day and (iii) with respect to subscriptions directly to the Company
without going through Distributor(s), sub-distributor(s) or a nominee from investors other
than Institutional Investors, on the relevant Transaction Day prior to the relevant Subscription
Cut-Off Time.
Redemption Process Redemption requests for Shares in part or in whole can be made to the Administrative Agent
on any day that is a Transaction Day.
Redemption requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off Time)
two Business Days before the relevant Transaction Day at the latest. Redemption requests (i)
from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may
also be submitted by swift or fax. Any applications for redemptions received after the
Redemption Cut-Off Time will be valid for the following Transaction Day.
Payment of the redemption proceeds shall be made generally 3 Business Days following the
relevant Transaction Day.
EU Savings Directive In scope.
Distributor Initially the Company and the Management Company will appoint Amber Capital Italia SGR
S.p.A as Distributor for the Shares of the AE Fund. The Distributor may appoint one or more
reputable sub-distributors at its discretion.
Profile of the Typical
Investor
The AE Fund is considered a complex product. Investors in the AE Fund are expected to:
have the knowledge of, and the investment experience in, financial products which
use derivatives and/or derivative strategies (such as the Sub-fund) and financial
markets generally; and
understand and can evaluate the strategy, characteristics and risks of the Sub-fund
in order to make an informed investment decision.
81
Classes of Shares Class A - EUR
Shares
Class A - USD
Shares
Class A - GBP
Shares
Class A - CHF
Shares
Class A2 –EUR
Shares
ISIN Codes LU0968832344 LU0968832427 LU0968832690 LU0968832856 LU0968833078
Reference Currency of
the Share Class
EUR USD GBP CHF EUR
Minimum Subscription
Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 EUR 500,000
Minimum Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 500 CHF 1,000 EUR 1,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark,
without
Equalisation
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax (Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 EUR 1,000
82
Classes of Shares Class B - EUR
Shares *
Class B - USD
Shares*
Class B - GBP
Shares*
Class B - CHF
Shares*
Class B – JPY
Shares*
ISIN Codes LU0968833151 LU0968833235 LU0968833318 LU0968833409 LU0968833581
Reference Currency of
the Share Class
EUR USD GBP CHF JPY
Minimum Subscription
Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 JPY 50,000,000
Minimum Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 500 CHF 1,000 JPY 100,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Distribution Policy Distribution Class Distribution Class Distribution Class Distribution Class Distribution Class
Subscription Tax (Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
* Class B shares are reserved for the following categories of institutional investors:
(a) Insurance companies;
(b) Other institutional investors who, like insurance companies, have objective requirements of periodically
receiving the proceeds originating from the Sub-fund's operations, as approved by the Directors in their full
discretion, or dully authorised persons.
Annual Distributions on Class B Shares will be determined by the Directors in their entire discretion after proposal
from the Investment Manager on the basis of a proportional allocation to Class B shares of the annual profits made
as per the Fund’s audited annual report.
83
Classes of Shares Class C - EUR
Shares *
Class C - USD
Shares *
ISIN Codes LU0968833664 LU0968833748
Reference Currency of
the Share Class
EUR USD
Minimum Subscription
Amount
EUR 25,000 USD 25,000
Minimum Subsequent
Subscription Amount
EUR 5,000 USD 5,000
Subscription Fee Nil Nil
Redemption Fee Nil Nil
Eligible Investors Authorized
Investors *
Authorized
Investors *
Investment
Management Fee
Nil Nil
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Performance Fee Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Subscription Tax (Taxe
d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000
* Class C shares are reserved to the Investment Manager, the Directors and to the staff of the Investment Manager and its
affiliates or to any other investors at the discretion of the Board of Directors.
84
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D – JPY
Shares
ISIN Codes LU0968833821 LU0968834043 LU0968834126 LU0968834399 LU0968834472
Reference Currency of
the Share Class
EUR USD GBP CHF JPY
Minimum Subscription
Amount
EUR 100, 000 To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 500 CHF 1,000 JPY 100,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax (Taxe
d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
85
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
Reference Currency of
the Share Class
EUR USD GBP CHF JPY
Minimum Subscription
Amount
Up to EUR
50,000,000
Up to USD
50,000,000
Up to GBP
50,000,000
Up to CHF
50,000,000
Up to JPY
5,000,000,000
Minimum Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax (Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
86
Classes of Shares Class M* Shares Class N* Shares Class O* Shares Class P* Shares Class Q* Shares
ISIN Codes N/A N/A N/A N/A N/A
Reference Currency of
the Share Class
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum Subscription
Amount
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum Subsequent
Subscription Amount
1 Share 1 Share 1 Share 1 Share 1 Share
Subscription Fee Up to 5% of the
Net Asset Value
Up to 5% of the
Net Asset Value
Up to 5% of the
Net Asset Value
Up to 5% of the
Net Asset Value
Up to 5% of the
Net Asset Value
Redemption Fee Up to 3.00% of
the Net Asset
Value
Up to 3.00% of
the Net Asset
Value
Up to 3.00% of
the Net Asset
Value
Up to 3.00% of
the Net Asset
Value
Up to 3.00% of the
Net Asset Value
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional and
Retail Investors
Investment
Management Fee
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a. of
the Net Asset
Value
Management Company
Fee
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
0.06% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
0.04% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax (Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
* Class M, Class N, Class O, Class P and Class Q Shares will be exclusively available to authorised Investors following Board
of Directors’ resolution.
** Servicing Fee is subject to a minimum of EUR 5,000 per month at the level of the Sub-fund.
87
Reference Currency and
Hedging
The Reference Currency of the AE Fund is the EUR.
In relation to Classes that are denominated in a currency other than the Reference Currency
of the Sub-fund, the Management Company and the Investment Manager may employ
techniques and instruments intended to provide protection (full or partial, as the case may
be) so far as possible against movements of the currency in which the relevant Class is
denominated against movements in the Reference Currency of the AE Fund. All costs and
gains/losses of such hedging transactions are borne separately by the respective Classes.
Although the Management Company and/or the Investment Manager intends to utilise such
currency hedging transactions in respect of the Classes of the AE Fund that are not
denominated in the Reference Currency of the AE Fund, it shall not be obliged to do so.
Likewise, in relation to investments that are denominated in a currency other than the
currency of any particular Class of Shares, the Management Company and the Investment
Manager may decide (but is not obliged) to enter into hedging transactions so as to mitigate
the risk borne by the holder of that Class arising out of (adverse) currency exchange rate
changes.
Performance Fee
The Investment Manager will also be entitled to a Performance Fee from the Fund calculated
on a Share-by-Share basis so that each Share is charged a Performance Fee which equates
precisely with that Share’s performance. This method of calculation ensures that (i) any
Performance Fee paid to the Investment Manager is charged only to those Shares which have
appreciated in value, (ii) all holders of Shares of the relevant class have the same amount of
capital per Share at risk in the Fund, and (iii) all Shares of the relevant class have the same
Net Asset Value per Share.
For each Calculation Period (as defined below), the Performance Fee in respect of each Class
will be equal to 20% of any appreciation in the Net Asset Value per Share (prior to reduction
of any accrued Performance Fee) of such Class during that Calculation Period above the
High Water Mark (as defined below) of that Share, as measured at the end of the Calculation
Period (the Net Profit). The Performance Fee in respect of each Calculation Period will be
calculated by reference to the Net Asset Value before deduction for any accrued
Performance Fee.
The Performance Fee is normally payable to the Investment Manager in arrears at the end
of each Calculation Period within seven Business Days after the end of such Calculation
Period. However, in the case of Shares redeemed during a Calculation Period, the
Performance Fee in respect of those Shares will be calculated as if the date of redemption of
such Shares were the end of the Calculation Period and will become payable immediately
after the relevant Transaction Day.
If the AE Fund is terminated before the end of a Calculation Period, the Performance Fee in
respect of the Calculation Period will be calculated and paid as though the date of
termination were the end of the relevant Calculation Period.
Transfers of Shares will be treated as redemption and subscription for Performance Fee
calculation purposes. Such treatment will result in the crystallization of any Performance
Fee due to holding at such time, in relation to the transferred Shares.
88
Calculation Period Each quarterly period commencing as of the day following the last day of the preceding
Calculation Period for the Share and ending as of the last Business Day of such calendar
quarter is a Calculation Period.
The initial Calculation Period in respect of any Class will commence on the Launch Date or
the Class Launch Date and end on the last Business Day of the calendar quarter in which
such Launch Date or Class Launch Date occurs.
High Water Mark In respect of each Class of Shares the greater of (i) the Net Asset Value per Share of the
relevant Class as of Launch Date or Class Launch Date and (ii) the highest Net Asset Value
per Share of the relevant Class in respect of which a Performance Fee has been paid at the
end of any previous Calculation Period (if any).
Equalisation If an investor subscribes for Shares at a time when the Net Asset Value per Share of the
relevant Class is other than the High Water Mark of that Class, certain adjustments will be
made to reduce inequities that could otherwise result to the investor or to the Investment
Manager as follows:
(A) If Shares are subscribed for at a time when the Net Asset Value per Share of the relevant
Class is less than the then High Water Mark for that Class, the investor will be required to
pay a Performance Fee with respect to any subsequent appreciation in the value of those
Shares above the Net Asset Value per Share of the relevant Class at the date of subscription
up to the High Water Mark of that Class at the end of the relevant Performance Period. The
Performance Fee will be charged at the end of each relevant Performance Period by
redeeming at the then current Net Asset Value per Share such number of the investor's
Shares of the relevant Class as have an aggregate Net Asset Value (after accrual for any
Performance Fee) equal to the relevant percentage of any such appreciation (a Performance
Fee Redemption). An amount equal to the aggregate Net Asset Value of the Shares so
redeemed will be paid to the Investment Manager as a Performance Fee and the Sub-fund
will not be required to pay to the investor the redemption proceeds in respect of such Shares.
Performance Fee Redemptions are employed to ensure that the Sub-fund maintains a
uniform Net Asset Value per Share of each Class. As regards the investor's remaining Shares
of the relevant Class, a Performance Fee will be charged in the normal manner described
above on the excess of the Net Asset Value per Share of the relevant Class at the end of a
Performance Period over the High Water Mark of that Class.
(B) If Shares are subscribed for at a time when the Net Asset Value per Share of the relevant
Class is greater than the then High Water Mark of that Class, the investor will be required
to pay an amount in excess of the then current Net Asset Value per Share of that Class equal
to the relevant percentage of the difference between the then current Net Asset Value per
Share of that Class (before accrual for the Performance Fee) and the High Water Mark of
that Class (an Equalisation Credit). At the date of subscription, the Equalisation Credit will
equal the Performance Fee per Share accrued with respect to the other Shares of the same
Class (the Maximum Equalisation Credit). The Equalisation Credit is payable to account for
the fact that the Net Asset Value per Share of that Class has been reduced to reflect an
accrued Performance Fee to be borne by existing Shareholders of the same Class and serves
as a credit against Performance Fees that might otherwise be payable by the Sub-fund but
that should not, in equity, be charged against the Shareholder making the subscription
because no favourable performance has yet occurred with respect to such Shares. The
Equalisation Credit ensures that all holders of Shares of the same Class have the same
amount of capital at risk per Share.
89
The additional amount invested as the Equalisation Credit will be at risk in the Sub-fund and
will therefore appreciate or depreciate based on the performance of the relevant Class
subsequent to the issue of the relevant Shares but will never exceed the Maximum
Equalisation Credit. In the event of a decline as at any Valuation Day in the Net Asset Value
per Share of those Shares, the Equalisation Credit will also be reduced by an amount equal
to the relevant percentage of the difference between the Net Asset Value per Share (before
accrual for the Performance Fee) at the date of issue and as at that Valuation Day. Any
subsequent appreciation in the Net Asset Value per Share of the relevant Class will result in
the recapture of any reduction in the Equalisation Credit but only to the extent of the
previously reduced Equalisation Credit up to the Maximum Equalisation Credit.
At the end of each relevant Performance Period, if the Net Asset Value per Share of the
relevant Class (before accrual for the Performance Fee) exceeds the High Water Mark of
that Class, that portion of the Equalisation Credit equal to the relevant percentage of the
excess, multiplied by the number of Shares of that Class subscribed for by the Shareholder,
will be applied to subscribe for additional Shares of that Class for the Shareholder.
Additional Shares of that Class will continue to be so subscribed for at the end of each
relevant Performance Period until the Equalisation Credit, as it may have appreciated or
depreciated in the Sub-fund after the original subscription for that Class of Shares was made,
has been fully applied. If the relevant Shareholder redeems his/her/its Shares of that Class
before the Equalisation Credit (as adjusted for depreciation and appreciation as described
above) has been fully applied, the Shareholder will receive additional redemption proceeds
equal to the Equalisation Credit then remaining multiplied by a fraction, the numerator of
which is the number of Shares of that Class being redeemed and the denominator of which
is the number of Shares of that Class held by the Shareholder immediately prior to the
redemption in respect of which an Equalisation Credit was paid on subscription.
The above described Performance Fee Equalisation applies to all Share Classes of the Sub-
fund except for the Share Classes indicated in the above Share Class tables.
Specific Risk Factors Investors should carefully review the risk factors set out in Section 19 of the General Section
before investing in the AE Fund. In addition, Investors should carefully review the following
risk factors that are specific to the Sub-fund:
Reliance on the Investment Manager and dependence on key personnel. The Shareholders
have no authority to make investment decisions on behalf of the AE Fund. The performance
of the AE Fund will depend in large part on the investment decisions undertaken by the
Investment Manager in accordance with the Investment Management Agreement. The aim
of achieving the Investment Objective does not represent an assurance that the Investment
Manager will achieve it (or any particular level of performance) and the Investment Manager
is not obliged to take any steps beyond the exercise of the Investment Manager's skill and
care as an experienced professional adviser in the investments as set out in the Prospectus
and this Special Section. No warranty is given by the Investment Manager as to the
performance or profitability of the AE Fund. There can be no guarantee that the investments
made by the AE Fund will be profitable or will effectively insulate against the risk of market
or other conditions which may cause the value of the Shares to decline. In addition, since
the performance of the AE Fund is dependent on the skills of the Investment Manager if the
services of the Investment Manager or its principals were to become unavailable, such
unavailability might have a detrimental effect on the AE Fund and its performance. Neither
the Investment Manager nor its principals or its or their affiliates are required to devote its
or their full time to the affairs of the AE Fund, and each of them will allocate as much time
to the business of the Sub-fund as it or they deem necessary in its or their sole and absolute
discretion. The Investment Manager and its Affiliates are also engaged in other similar
business activities to which they devote substantial time.
90
Historical performance. The past performance of the AE Fund – indicated in the key
investor information documents or any marketing material issued for the AE Fund - or any
other investment vehicle managed by the Investment Manager or any of its Affiliates is not
meant to be an indication of its potential future performance. The nature of, and risk
associated with, the Sub-fund may differ substantially from those investments and strategies
undertaken historically by the Investment Manager, its Affiliates or the Sub-fund. In
addition, market conditions and investment opportunities may not be the same for the Sub-
fund as they had been in the past, and may be less favourable. Therefore, there can be no
assurance that the Sub-fund's assets will perform as well as the past investments managed
by the Investment Manager or its Affiliates. It is possible that significant disruptions in, or
historically unprecedented effects on, the financial markets and/or the businesses in which
the Sub-fund invests in may occur, which could diminish any relevance the historical
performance data of the Sub-fund may have to the future performance of the Sub-fund.
Profit sharing. In addition to receiving an Investment Management Fee, the Investment
Manager is entitled to receive the Performance Fee based on the appreciation in the value of
the Sub-fund's assets and accordingly the Performance Fee will increase with regard to
unrealised appreciation, as well as realised gains. Accordingly, a Performance Fee may be
paid on unrealised gains which may subsequently never be realised. The Performance Fee
may create an incentive for an Investment Manager to propose investments for the Sub-fund
which are riskier than would be the case in the absence of a fee based on the performance of
the Sub-fund.
Business risk. There can be no assurance that the Sub-fund will achieve its investment
objectives in respect of any of the strategies employed. The investment results of the Sub-
fund are reliant upon the success of the strategies implemented by the Investment Manager.
Declining performance with asset growth. Trading large positions may adversely affect
prices and performance. In addition, there can be no assurance that appropriate investment
opportunities will be available to accommodate future increases in assets under management
which may require the Investment Manager to modify its investment decisions for the Sub-
fund because it cannot deploy all the assets in the manner it desires. There can be no
assurance whatsoever as to the effect of an increase in equity under management may have
on the Sub-fund's future performance.
Effect of substantial redemptions. Substantial redemptions by Shareholders within a short
period of time could require the Sub-fund to liquidate its positions more rapidly than would
otherwise be desirable, possibly reducing the value of the Sub-fund's assets and/or disrupting
the investment strategy. Reduction in the size of the Sub-fund could make it more difficult
to generate a positive return or to recoup losses due to, among other things, reductions in the
Sub-fund's ability to take advantage of particular investment opportunities or decreases in
the ratio of its income to its expenses.
Leverage. The Sub-fund may achieve leverage through the use of financial derivatives
instruments for the purpose of making investments. The use of leverage creates special risks
and may significantly increase the Sub-fund's investment risk. Leverage creates an
opportunity for greater yield and total return but, at the same time, will increase the exposure
of the Sub-fund to capital risk.
Exposure to Material Non-Public Information. From time to time, the Investment Manager
may receive material non-public information with respect to an issuer of publicly traded
securities. In such circumstances, the Sub-fund may be prohibited, by law, policy or contract,
for a period of time from (i) unwinding a position in such issuer, (ii) establishing an initial
91
position or taking any greater position in such issuer, and (iii) pursuing other investment
opportunities related to such issuer.
Other trading activities of the Investment Manager and its Affiliates. Conflicts of interest
may arise from the fact that the Investment Manager and its affiliates provide services to
clients other than the AE Sub-fund, including, without limitation, investment funds,
separately managed accounts, proprietary accounts and other investment vehicles
(collectively, "Other Accounts" and, together with the Company, the "Accounts" and each,
an "Account"). The AE Sub-fund will not have an interest in any Other Accounts.
Other Accounts may have investment objectives, programs, strategies and positions that are
similar to or may conflict with those of the AE Sub-fund, or may compete with or have
interests adverse to the AE Sub-fund. Such conflicts could affect the prices and availability
of financial instruments in which the AE Sub-fund invests. Even if an Other Account has
investment objectives, programs or strategies that are similar to those of the AE Sub-fund,
the Investment Manager may give advice or take action with respect to the investments held
by, and transactions of, the Other Accounts that may differ from the advice given or the
timing or nature of any action taken with respect to the investments held by, and transactions
of, the AE Sub-fund due to a variety of reasons, including, without limitation, differences
between the investment strategy, financing terms, regulatory treatment and tax treatment of
the Other Accounts and the AE Sub-fund. As a result, the AE Sub-fund and an Other
Account may have substantially different portfolios and investment returns. Conflicts of
interest may also arise when the Investment Manager makes decisions on behalf of the AE
Sub-fund with respect to matters where the interests of the Investment Manager or one or
more Other Accounts differs from the interests of the AE Sub-fund.
Lack of Exclusivity. The Investment Manager, its affiliates and personnel will devote as
much of their time to the activities of the AE Sub-fund as they deem necessary and
appropriate. The Investment Manager, its affiliates and personnel will not be restricted from
forming additional investment funds or vehicles from entering into other investment
advisory relationships or from engaging in other business activities, even if such activities
may be in competition with the AE Sub-fund and/or may involve substantial time and
resources of the Investment Manager, its affiliates or personnel. These activities could be
viewed as creating a conflict of interest in that the time and effort of the Investment Manager,
its affiliates and personnel will not be devoted exclusively to the business of the AE Sub-
fund but will be allocated between the business of the AE Sub-fund and the management of
Other Accounts and businesses.
From time to time, senior management and key employees of the Investment Manager may
serve as directors, advisory board members or consultants of certain portfolio companies or
other entities. In connection with such services, such persons may receive directors' fees or
other similar compensation attributable to such employees' services.
Allocations of Trades and Investment Opportunities. It is the policy of the Investment
Manager to allocate investment opportunities to the AE Sub-fund and to any Other Accounts
fairly, to the extent practical and in accordance with the AE Sub-fund’s or Other Accounts'
applicable investment strategies, over a period of time. Investment opportunities will
generally be allocated among those Accounts for which participation in the respective
opportunity is considered appropriate, taking into account, among other considerations: (i)
available cash of the Accounts for the proposed investment; (ii) the primary investment
strategy of the Accounts; (iii) the liquidity profiles of the Accounts; (iv) the primary markets
invested in by the Accounts; (v) the potential for the proposed investment to create an
imbalance in an Account's portfolio; (vi) the amount of Assets held by the Accounts; (vii)
whether the risk-return profile of the proposed investment is consistent with an Account's
92
objectives; and (viii) regulatory restrictions or other eligibility criteria that would or could
limit an Account's ability to participate in a proposed investment.
The Investment Manager will have no obligation to purchase or sell a security for, enter into
a transaction on behalf of, or provide an investment opportunity to the AE Sub-fund or Other
Accounts solely because the Investment Manager purchases or sells the same security for,
enters into a transaction on behalf of, or provides an opportunity to an Other Account or the
AE Sub-fund if, in its reasonable opinion, such security, transaction or investment
opportunity does not appear to be suitable, practicable or desirable for the AE Sub-fund or
the Other Account.
Order Aggregation and Average Pricing. If the Investment Manager determines that the
purchase or sale of a security is appropriate with regard to the AE Sub-fund and any Other
Accounts, the Investment Manager may, but is not obligated to, purchase or sell such a
security on behalf of such Accounts with an aggregated order, for the purpose of reducing
transaction costs, to the extent permitted by applicable law. When an aggregated order is
filled through multiple trades at different prices on the same day, each participating Account
will receive the average price, with transaction costs generally allocated pro rata based on
the size of each Account's participation in the order (or allocation in the event of a partial
fill) as determined by the Investment Manager. In the event of a partial fill, allocations may
be modified on a basis that the Investment Manager deems to be appropriate, including, for
example, in order to avoid odd lots or de minimis allocations. When orders are not
aggregated, trades generally will be processed in the order that they are placed with the
broker or counterparty selected by the Investment Manager. As a result, certain trades in the
same security for one Account (including an Account in which the Investment Manager and
its personnel may have a direct or indirect interest) may receive more or less favourable
prices or terms than another Account, and orders placed later may not be filled entirely or at
all, based upon the prevailing market prices at the time of the order or trade. In addition,
some opportunities for reduced transaction costs and economies of scale may not be
achieved.
93
SPECIAL SECTION II – Alpha UCITS SICAV – Anavon Global Equity Long/Short Fund
This Special Section must be read in conjunction with the General Section of the Prospectus. This Special Section refers
only to the Alpha UCITS SICAV – Anavon Global Equity Long/Short Fund (the Anavon Fund or the Sub-fund).
Investment Objective The Anavon Fund's overall investment objective is to achieve maximum capital appreciation
commensurate with reasonable risk. In pursuing this objective, the Investment Manager uses
fundamental analysis to select long and short investments primarily in equity securities.
Investment Strategy The core principle of the Sub-fund's strategy is to identify equity investments with asymmetric
risk- reward profiles through deep fundamental corporate and industry analysis. The
Investment Manager aims to identify long and short investment opportunities that offer
superior return potential over an investment horizon of 2-3 years for long investments and 12-
18 months for short investments and where the risk of permanent capital loss is limited and
reasonably quantifiable through fundamental research.
Investment opportunities may arise as a result of factors such as technical exogenous factors
leading to forced selling in a particular security, market valuations that fail to recognise the
upside or downside associated with particular corporate actions or a general misappraisal of a
company's intrinsic value due to near term concerns. Such near term concerns may arise from
a particular legal challenge on the way the company markets or produces its products,
currency fluctuations or devaluations in one of the company's geographic segments that could
impact the company's ability to deliver on consensus earnings forecasts, certain renegotiations
of business terms where the end result is difficult to accurately predict, concerns about the
company's balance sheet structure, debt covenants and debt repayment schedule or other
concerns that are excessively weighing on the company's market price. In all of these
situations the Investment Manager's deep multidimensional fundamental analysis in
combination with its long-term investment horizon will allow it to build positions and benefit
as the relevant factors materialise or subside.
The investment strategies employed may encompass, among other things, any or all of the
following strategies: directional long or short positions with or without a catalyst; long/short
equity pairs. Short positions can only be implemented via financial derivatives.
Investment Policy The Anavon Fund intends to accomplish its investment objective by investing, either directly
or through the use of financial derivative instruments, in equity securities. The Sub-fund
invests in companies located around the world with a focus on developed markets that operate
in a wide range of industries. The Sub-fund may obtain exposure to China through investments
in securities listed on the Hong Kong stock exchange. To increase the performance potential
of the Sub-fund while mitigating general market risk, the Sub-fund employs a hedged
approach, taking short positions as well as long positions. Over the long term, the Investment
Manager aims to achieve returns in the Sub-fund that are higher than those implied by broad
market indices while assuming less risk than that inherent in a market portfolio.
The Anavon Fund will invest in financial derivative instruments to achieve its investment
objective and for the purposes of hedging. These instruments may include, but are not limited
to, futures, options, contracts for difference, total return swaps, forward contracts on financial
instruments and options on such contracts,
94
The Anavon Fund may invest in debt securities, cash and cash equivalents, units of UCITs
and UCIs, including money market funds, and in assets denominated in any currency. All
investments will be made in accordance with the limits set out in the Prospectus. When
required by the conditions on the financial markets, the Sub-fund may invest on a temporary
basis up to all its assets in term deposits or money market instruments in order to protect
investors' interests.
Global Exposure The Sub-fund will use the absolute Value-at-Risk (VaR) methodology to monitor its global
exposure.
The leverage of the Sub-fund (calculated as the sum of the notionals of the financial derivative
instruments used) is expected to range between 100% and 300% of the Sub-fund's NAV
including derivatives used for currency hedges and between 100% and 200% excluding
derivatives used for currency hedges. These ranges are not meant to be binding limits. In
exceptional circumstances, the leverage of the Sub-fund may be higher due to additional
hedging requirements.
Additional Investment
Restrictions
In addition to the Investment Restrictions set out in Section 3 of the General Section, the
Anavon Fund will not invest more than 10% of its assets in UCIs or UCITS.
Lending Agent
RBC Investor Services Trust (Canada branch), which belongs to the same group as the
Depositary will be appointed as Lending Agent, to enter into securities lending transactions
on behalf of the Sub-Fund .
Investment Manager The Management Company has entered into an investment management agreement (the
Investment Management Agreement) with Anavon Capital LLP, a limited partnership
incorporated under the laws of England and Wales, with registered offices at 12 Portman
Close, London W1H 6BR, United Kingdom, an investment management company authorised
by the Financial Conduct Authority and registered with number 530523. The Investment
Management Agreement is governed by Luxembourg law and is entered into for an unlimited
period of time.
Anavon Capital LLP has been appointed as Investment Manager with full discretion, subject
to the overall review and control of the Management Company, to manage and invest the
assets of the Sub-fund in accordance with the Investment Objectives, Investment Policy and
Investment Restrictions set out in this Prospectus.
The Investment Management Agreement may be terminated by either party upon a three
months' written notice. It may be terminated without notice in certain circumstances as set out
in the Investment Management Agreement.
Launch Date 8th October 2014.
Term Infinite.
95
Initial Offering Period The Initial Offering Period of the Anavon Fund was set from 2nd October 2014 until and
including 7th October 2014. The Initial Subscription Price per Share was USD 1,000 or
equivalent in any other Reference Currency of any Class.
Business Day Means each Luxembourg Banking Day and a day on which banks are generally open for
business in the United Kingdom, the United States and Luxembourg (excluding Saturdays and
Sundays and public holidays).
Transaction Day Every Wednesday. Should a Wednesday not be Business Day, the following day which is a
Business Day.
Subscription Process Subscription requests for Shares of the Anavon Fund can be made to the Administrative Agent
on any day that is a Transaction Day starting as of the Launch Date or the Class Launch Date.
Subscription requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Subscription Cut-Off Time)
two Business Days before the relevant Transaction Day at the latest. Subscription requests (i)
from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may
also be submitted by swift or fax. Any applications for subscriptions received after the
Subscription Cut-Off Time will be valid for the following Transaction Day.
Subscriptions may be made only by investors who are not Restricted Persons by delivering to
the account of the Depositary cleared funds for the full amount of the subscription price (plus
any Subscription Fee if applicable) of the Shares being subscribed for pursuant to the
subscription request, (i) with respect to subscriptions from Institutional Investors, within 3
Business Days following the relevant Transaction Day, (ii) with respect to subscriptions
through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days following the
relevant Transaction Day and (iii) with respect to subscriptions directly to the Company
without going through Distributor(s), sub-distributor(s) or a nominee from investors other
than Institutional Investors, on the relevant Transaction Day prior to the relevant Subscription
Cut-Off Time.
Redemption Process Redemption requests for Shares in part or in whole can be made to the Administrative Agent
on any day that is a Transaction Day.
Redemption requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off Time) two
Business Days before the relevant Transaction Day at the latest. Redemption requests (i) from
Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may also
be submitted by swift or fax. Any applications for redemptions received after the Redemption
Cut-Off Time will be valid for the following Transaction Day.
Payment of the redemption proceeds shall be made generally 3 Business Days following the
relevant Transaction Day.
EU Savings Directive In scope.
96
Distributor Initially the Company and the Management Company will appoint Anavon Capital LLP as
Distributor for the Shares of the Anavon Fund. The Distributor may appoint one or more
reputable sub-distributors at its discretion.
Profile of the Typical
Investor
The Anavon Fund is considered a complex product. Investors in the Anavon Fund are
expected to:
have the knowledge of, and the investment experience in, financial products which
use derivatives and/or derivative strategies (such as the Sub-fund) and financial
markets generally;
and
understand and can evaluate the strategy, characteristics and risks of the Sub-fund in
order to make an informed investment decision.
97
Classes of Shares Class A - EUR
Shares
Class A - USD
Shares
Class A - GBP
Shares
Class A - CHF
Shares
Class A2 –EUR
Shares
ISIN Codes LU1102329189 LU1102329692 LU1102330195 LU1104536120 LU1198093392
Reference Currency
of the Share Class
EUR USD GBP CHF EUR
Minimum
Subscription
Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 EUR 500,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 EUR 10,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.50% p.a. of
the Net Asset
Value
1.50% p.a. of
the Net Asset
Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of
the Net Asset
Value
0.05% p.a. of
the Net Asset
Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water
Mark, without
Equalisation
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset
Value
0.01% of the
Net Asset
Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 EUR 1,000
98
Classes of Shares Class B - EUR
Shares
Class B - USD
Shares
Class B - GBP
Shares
Class B - CHF
Shares
Class B2 – EUR
Shares
ISIN Codes LU1102329262 LU1102329775 LU1102330278 LU1104536393 LU1210459076
Reference Currency
of the Share Class
EUR USD GBP CHF EUR
Minimum
Subscription Amount
EUR 50,000 USD 50,000 GBP 25,000 CHF 50,000 EUR 50,000
Minimum
Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 EUR 1,000
Subscription Fee Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the Net
Asset Value
Up to 2% of the
Net Asset Value
Redemption Fee Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the Net
Asset Value
Up to 2% of the
Net Asset Value
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
2% p.a. of the
Net Asset Value
2% p.a. of the
Net Asset Value
2% p.a. of the
Net Asset Value
2% p.a. of the Net
Asset Value
2% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a. of
the Net Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water
Mark, without
Equalisation
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation Class Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 EUR 1,000
99
Classes of Shares Class C* - EUR
Shares
Class C* - USD
Shares
Class C* - GBP
Shares
ISIN Codes LU1198093475 LU1198093632 LU1198093715
Reference
Currency of the
Share Class
EUR USD GBP
Minimum
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000
Minimum
Subsequent
Subscription
Amount
EUR 1,000 USD 1,000 GBP 1,000
Subscription Fee Nil Nil Nil
Redemption Fee Nil Nil Nil
Eligible Investors Authorized
Investors *
Authorized
Investors *
Authorized
Investors *
Investment
Management Fee
Nil Nil Nil
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe
d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000
* Class C shares are reserved to the staff of the Investment Manager and its affiliates, to the Directors or to any other
investors at the discretion of the Board of Directors.
100
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D – JPY
Shares
ISIN Codes LU1210452816 LU1210452907 LU1210453111 LU1210453202 LU1210453384
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 JPY 50,000,000
Minimum
Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Redemption Fee Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Up to 2% of the
Net Asset Value
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Up to 3% p.a. of
the Net Asset
Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
101
Classes of Shares Class E - EUR
Shares
Class E - USD
Shares
Class E - GBP
Shares
Class E - CHF
Shares
Class E – JPY
Shares
ISIN Codes LU1102329007 LU1102329429 LU1102329932 LU1104535825 LU1210453467
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 JPY 50,000,000
Minimum
Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.00% p.a. of the
Net Asset Value
1.00% p.a. of the
Net Asset Value
1.00% p.a. of the
Net Asset Value
1.00% p.a. of the
Net Asset Value
1.00% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
102
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
ISIN Codes LU1210453541 LU1210453624 LU1210453970 LU1210454192 LU1210454275
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
Up to EUR
100,000,000
Up to USD
100,000,000
Up to GBP
100,000,000
Up to CHF
100,000,000
Up to JPY
5,000,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a. of
the Net Asset
Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
103
Classes of Shares Class T - EUR
Shares
Class T - USD
Shares
Class T - GBP
Shares
Class T - CHF
Shares
Class T – JPY
Shares
ISIN Codes LU1102329346 LU1102329858 LU1102330351 LU1104536559 LU1210454358
Reference
Currency of the
Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 500,000 USD 500,000 GBP 250,000 CHF 500,000 JPY 50,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
1.5% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
104
Classes of Shares Class M Shares Class NShares Class O****
Shares
Class P****
Shares
Class Q****
Shares
ISIN Codes LU1380602687 LU1387752832
N/A N/A N/A
Reference Currency of
the Share Class
EUR USD To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class Launch
Date
Minimum Subscription
Amount
EUR 500,000 USD 500,000 To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class Launch
Date
Minimum Subsequent
Subscription Amount
EUR 10,000 USD 10,000 To be determined
on the Class
Launch Date
To be determined
on the Class
Launch Date
To be determined
on the Class Launch
Date
Subscription Fee Nil Nil N Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the Net
Asset Value
Redemption Fee Nil Nil Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the Net
Asset Value
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional and
Retail Investors
Investment
Management Fee
1.00% p.a. of the
Net Asset Value
1.00% p.a. of the
Net Asset Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a. of
the Net Asset Value
Management Company
Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a. of
the Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation Class
Subscription Tax (Taxe
d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
105
** Servicing Fee subject to a minimum of EUR 5,000 per month at the level of the Sub-fund.
*** Class E Shares will be available for subscription to investors until the total assets under management of the Sub-fund reach
USD 50 million (or the equivalent in aggregate in the reference currencies of the relevant Classes). The board may, at its own
discretion raise this amount to USD 75 million.
****Class O, Class P and Class Q Shares will be available to authorised Investors following Board of Directors resolution.
Reference Currency and
Hedging
The Reference Currency of the Anavon Fund is the USD.
In relation to Classes that are denominated in a currency other than the Reference Currency
of the Sub-fund, the Management Company and the Investment Manager may employ
techniques and instruments intended to provide protection (full or partial, as the case may be)
so far as possible against movements of the currency in which the relevant Class is
denominated against movements in the Reference Currency of the Anavon Fund. All costs
and gains/losses of such hedging transactions are borne separately by the respective Classes.
These Classes will not be leveraged as a result of such currency exposure. Although the
Management Company and/or the Investment Manager intends to utilise such currency
hedging transactions in respect of the Classes of the Anavon Fund that are not denominated
in the Reference Currency of the Anavon Fund, it shall not be obliged to do so.
Likewise, in relation to investments that are denominated in a currency other than the
currency of any particular Class of Shares, the Management Company and the Investment
Manager may decide (but is not obliged) to enter into hedging transactions so as to mitigate
the risk borne by the holder of that Class arising out of (adverse) currency exchange rate
changes.
Performance Fee The Investment Manager will also be entitled to a Performance Fee from the Fund calculated
on a Share-by-Share basis so that each Share is charged a Performance Fee which equates
precisely with that Share’s performance. This method of calculation ensures that (i) any
Performance Fee paid to the Investment Manager is charged only to those Shares which have
appreciated in value, (ii) all holders of Shares of the relevant class have the same amount of
capital per Share at risk in the Fund, and (iii) all Shares of the relevant class have the same
Net Asset Value per Share.
For each Calculation Period (as defined below), the Performance Fee in respect of each Class
will be equal to 20% of any appreciation in the Net Asset Value per Share (prior to reduction
of any accrued Performance Fee) of such Class during that Calculation Period above the High
Water Mark (as defined below) of that Share, as measured at the end of the Calculation Period
(the Net Profit). The Performance Fee in respect of each Calculation Period will be calculated
by reference to the Net Asset Value before deduction for any accrued Performance Fee.
The Performance Fee is normally payable to the Investment Manager in arrears at the end of
each Calculation Period within seven Business Days after the end of such Calculation Period.
However, in the case of Shares redeemed during a Calculation Period, the Performance Fee
in respect of those Shares will be calculated as if the date of redemption of such Shares were
the end of the Calculation Period and will become payable immediately after the relevant
Transaction Day.
106
If the Anavon Fund is terminated before the end of a Calculation Period, the Performance
Fee in respect of the Calculation Period will be calculated and paid as though the date of
termination were the end of the relevant Calculation Period.
Transfers of Shares will be treated as redemption and subscription for Performance Fee
calculation purposes. Such treatment will result in the crystallisation of any Performance Fee
due to holding at such time, in relation to the transferred Shares.
Calculation Period Each annual period commencing as of the day following the last day of the preceding
Calculation Period for the Share and ending as of the last Business Day of such calendar year
is a Calculation Period.
In case of a launch during a calendar year, the initial Calculation Period in respect of any
Class will commence on the Launch Date or the Class Launch Date and end on the last
Business Day of the calendar year in which such Launch Date or Class Launch Date occurs.
High Water Mark In respect of each Class of Shares the greater of (i) the Net Asset Value per Share of the
relevant Class as of Launch Date or Class Launch Date and (ii) the highest Net Asset Value
per Share of the relevant Class in respect of which a Performance Fee has been paid at the
end of any previous Calculation Period (if any).
Equalisation If an investor subscribes for Shares at a time when the Net Asset Value per Share of the
relevant Class is other than the High Water Mark of that Class, certain adjustments will be
made to reduce inequities that could otherwise result to the investor or to the Investment
Manager as follows:
(A) If Shares are subscribed for at a time when the Net Asset Value per Share of the relevant
Class is less than the then High Water Mark for that Class, the investor will be required to
pay a Performance Fee with respect to any subsequent appreciation in the value of those
Shares above the Net Asset Value per Share of the relevant Class at the date of subscription
up to the High Water Mark of that Class at the end of the relevant Performance Period. The
Performance Fee will be charged at the end of each relevant Performance Period by
redeeming at the then current Net Asset Value per Share such number of the investor's Shares
of the relevant Class as have an aggregate Net Asset Value (after accrual for any Performance
Fee) equal to the relevant percentage of any such appreciation (a Performance Fee
Redemption). An amount equal to the aggregate Net Asset Value of the Shares so redeemed
will be paid to the Investment Manager as a Performance Fee and the Sub-fund will not be
required to pay to the investor the redemption proceeds in respect of such Shares.
Performance Fee Redemptions are employed to ensure that the Sub-fund maintains a uniform
Net Asset Value per Share of each Class. As regards the investor's remaining Shares of the
relevant Class, a Performance Fee will be charged in the normal manner described above on
the excess of the Net Asset Value per Share of the relevant Class at the end of a Performance
Period over the High Water Mark of that Class.
(B) If Shares are subscribed for at a time when the Net Asset Value per Share of the relevant
Class is greater than the then High Water Mark of that Class, the investor will be required to
pay an amount in excess of the then current Net Asset Value per Share of that Class equal to
the relevant percentage of the difference between the then current Net Asset Value per Share
of that Class (before accrual for the Performance Fee) and the High Water Mark of that Class
(an Equalisation Credit). At the date of subscription, the Equalisation Credit will equal the
Performance Fee per Share accrued with respect to the other Shares of the same Class (the
107
Maximum Equalisation Credit). The Equalisation Credit is payable to account for the fact
that the Net Asset Value per Share of that Class has been reduced to reflect an accrued
Performance Fee to be borne by existing Shareholders of the same Class and serves as a credit
against Performance Fees that might otherwise be payable by the Sub-fund but that should
not, in equity, be charged against the Shareholder making the subscription because no
favourable performance has yet occurred with respect to such Shares. The Equalisation Credit
ensures that all holders of Shares of the same Class have the same amount of capital at risk
per Share.
The additional amount invested as the Equalisation Credit will be at risk in the Sub-fund and
will therefore appreciate or depreciate based on the performance of the relevant Class
subsequent to the issue of the relevant Shares but will never exceed the Maximum
Equalisation Credit. In the event of a decline as at any Valuation Day in the Net Asset Value
per Share of those Shares, the Equalisation Credit will also be reduced by an amount equal
to the relevant percentage of the difference between the Net Asset Value per Share (before
accrual for the Performance Fee) at the date of issue and as at that Valuation Day. Any
subsequent appreciation in the Net Asset Value per Share of the relevant Class will result in
the recapture of any reduction in the Equalisation Credit but only to the extent of the
previously reduced Equalisation Credit up to the Maximum Equalisation Credit.
At the end of each relevant Performance Period, if the Net Asset Value per Share of the
relevant Class (before accrual for the Performance Fee) exceeds the High Water Mark of that
Class, that portion of the Equalisation Credit equal to the relevant percentage of the excess,
multiplied by the number of Shares of that Class subscribed for by the Shareholder, will be
applied to subscribe for additional Shares of that Class for the Shareholder. Additional Shares
of that Class will continue to be so subscribed for at the end of each relevant Performance
Period until the Equalisation Credit, as it may have appreciated or depreciated in the Sub-
fund after the original subscription for that Class of Shares was made, has been fully applied.
If the relevant Shareholder redeems his/her/its Shares of that Class before the Equalisation
Credit (as adjusted for depreciation and appreciation as described above) has been fully
applied, the Shareholder will receive additional redemption proceeds equal to the
Equalisation Credit then remaining multiplied by a fraction, the numerator of which is the
number of Shares of that Class being redeemed and the denominator of which is the number
of Shares of that Class held by the Shareholder immediately prior to the redemption in respect
of which an Equalisation Credit was paid on subscription.
The above described Performance Fee Equalisation applies to all Share Classes of the Sub-
fund except for the Share Classes indicated in the above Share Class tables.
Specific Risk Factors Investors should carefully review the risk factors set out in Section 19 of the General Section
before investing in the Anavon Fund. In addition, Investors should carefully review the
following risk factors that are specific to the Sub-fund:
Reliance on the Investment Manager and dependence on key personnel. The Shareholders
have no authority to make investment decisions on behalf of the Anavon Fund. The
performance of the Anavon Fund will depend in large part on the investment decisions
undertaken by the Investment Manager in accordance with the Investment Management
Agreement. The aim of achieving the Investment Objective does not represent an assurance
that the Investment Manager will achieve it (or any particular level of performance) and the
Investment Manager is not obliged to take any steps beyond the exercise of the Investment
Manager's skill and care as an experienced professional adviser in the investments as set out
108
in the Prospectus and this Special Section. No warranty is given by the Investment Manager
as to the performance or profitability of the Anavon Fund. There can be no guarantee that the
investments made by the Anavon Fund will be profitable or will effectively insulate against
the risk of market or other conditions which may cause the value of the Shares to decline. In
addition, since the performance of the Anavon Fund is dependent on the skills of the
Investment Manager if the services of the Investment Manager or its principals were to
become unavailable, such unavailability might have a detrimental effect on the Anavon Fund
and its performance. Neither the Investment Manager nor its principals or its or their affiliates
are required to devote its or their full time to the affairs of the Anavon Fund, and each of
them will allocate as much time to the business of the Sub-fund as it or they deem necessary
in its or their sole and absolute discretion. The Investment Manager and its Affiliates are also
engaged in other similar business activities to which they devote substantial time.
Currency Risks: the Sub-fund may invest in financial instruments denominated in non-USD
currencies, the prices of which are determined with reference to currencies other than the
USD. The Sub-fund, however, values its financial instruments in USD. The Sub-fund may or
may not seek to hedge its non-USD currency exposure by entering into currency hedging
transactions, such as treasury locks, forward contracts, futures contracts and cross-currency
swaps. There can be no guarantee that financial instruments suitable for hedging currency or
market shifts will be available at the time when the Sub-fund wishes to use them, or that
hedging techniques employed by the Sub-fund will be effective. Furthermore, certain
currency market risks may not be fully hedged or hedged at all. To the extent unhedged, the
value of the Sub-fund's positions denominated in currencies other than USD will fluctuate
with USD exchange rates as well as with the price changes of the investments in the various
local markets and currencies. In such cases, an increase in the value of the USD compared to
the other currencies in which the Sub-fund makes investments will reduce the effect of any
increases and magnify the effect of any decreases in the prices of the Sub-fund's investments
in their local markets and may result in a loss to the Sub-fund. Conversely, a decrease in the
value of the USD will have the opposite effect on the Sub-fund's non-USD investments.
Historical performance. The past performance of the Anavon Fund – indicated in the key
investor information documents or any marketing material issued for the Anavon Fund - or
any other investment vehicle managed by the Investment Manager or any of its Affiliates is
not meant to be an indication of its potential future performance. The nature of, and risk
associated with, the Sub-fund may differ substantially from those investments and strategies
undertaken historically by the Investment Manager, its Affiliates or the Sub-fund. In addition,
market conditions and investment opportunities may not be the same for the Sub-fund as they
had been in the past, and may be less favourable. Therefore, there can be no assurance that
the Sub-fund's assets will perform as well as the past investments managed by the Investment
Manager or its Affiliates. It is possible that significant disruptions in, or historically
unprecedented effects on, the financial markets and/or the businesses in which the Sub-fund
invests in may occur, which could diminish any relevance the historical performance data of
the Sub-fund may have to the future performance of the Sub-fund.
Profit sharing. In addition to receiving an Investment Management Fee, the Investment
Manager is entitled to receive the Performance Fee based on the appreciation in the value of
the Sub-fund's assets and accordingly the Performance Fee will increase with regard to
unrealised appreciation, as well as realised gains. Accordingly, a Performance Fee may be
paid on unrealised gains which may subsequently never be realised. The Performance Fee
may create an incentive for an Investment Manager to propose investments for the Sub-fund
which are riskier than would be the case in the absence of a fee based on the performance of
the Sub-fund.
109
Business risk. There can be no assurance that the Sub-fund will achieve its investment
objectives in respect of any of the strategies employed. The investment results of the Sub-
fund are reliant upon the success of the strategies implemented by the Investment Manager.
Declining performance with asset growth. Trading large positions may adversely affect prices
and performance. In addition, there can be no assurance that appropriate investment
opportunities will be available to accommodate future increases in assets under management
which may require the Investment Manager to modify its investment decisions for the Sub-
fund because it cannot deploy all the assets in the manner it desires. There can be no assurance
whatsoever as to the effect of an increase in equity under management may have on the Sub-
fund's future performance.
Effect of substantial redemptions. Substantial redemptions by Shareholders within a short
period of time could require the Sub-fund to liquidate its positions more rapidly than would
otherwise be desirable, possibly reducing the value of the Sub-fund's assets and/or disrupting
the investment strategy. Reduction in the size of the Sub-fund could make it more difficult to
generate a positive return or to recoup losses due to, among other things, reductions in the
Sub-fund's ability to take advantage of particular investment opportunities or decreases in the
ratio of its income to its expenses.
Leverage. The Sub-fund may achieve leverage through the use of financial derivatives
instruments for the purpose of making investments. The use of leverage creates special risks
and may significantly increase the Sub-fund's investment risk. Leverage creates an
opportunity for greater yield and total return but, at the same time, will increase the exposure
of the Sub-fund to capital risk.
Allocations of Trades and Investment Opportunities. It is the policy of the Investment
Manager to allocate investment opportunities to the Anavon Global Equity Long/Short Fund
and to any other accounts managed by the Investment Manager fairly, to the extent practical
and in accordance with the Sub-fund’s or other accounts' applicable investment strategies,
over a period of time. Investment opportunities will generally be allocated among those
accounts for which participation in the respective opportunity is considered appropriate,
taking into account, among other considerations: (i) available cash of the accounts for the
proposed investment; (ii) the primary investment strategy of the accounts; (iii) the liquidity
profiles of the accounts; (iv) the primary markets invested in by the accounts; (v) the potential
for the proposed investment to create an imbalance in an account's portfolio; (vi) the amount
of assets held by the accounts; (vii) whether the risk-return profile of the proposed investment
is consistent with an account's objectives; and (viii) regulatory restrictions or other eligibility
criteria that would or could limit an account's ability to participate in a proposed investment.
The Investment Manager will have no obligation to purchase or sell a security for, enter into
a transaction on behalf of, or provide an investment opportunity to the Anavon Global Equity
Long/Short Fund or other accounts solely because the Investment Manager purchases or sells
the same security for, enters into a transaction on behalf of, or provides an opportunity to an
other account or the Anavon Fund if, in its reasonable opinion, such security, transaction or
investment opportunity does not appear to be suitable, practicable or desirable for the Anavon
Global Equity Long/Short Fund or the other account.
Order Aggregation and Average Pricing. If the Investment Manager determines that the
purchase or sale of a security is appropriate with regard to the Anavon Fund and any other
accounts, the Investment Manager may, but is not obligated to, purchase or sell such a security
on behalf of such accounts with an aggregated order, for the purpose of reducing transaction
costs, to the extent permitted by applicable law. When an aggregated order is filled through
110
multiple trades at different prices on the same day, each participating account will receive the
average price, with transaction costs generally allocated pro rata based on the size of each
account's participation in the order (or allocation in the event of a partial fill) as determined
by the Investment Manager. In the event of a partial fill, allocations may be modified on a
basis that the Investment Manager deems to be appropriate, including, for example, in order
to avoid odd lots or de minimis allocations. When orders are not aggregated, trades generally
will be processed in the order that they are placed with the broker or counterparty selected by
the Investment Manager. As a result, certain trades in the same security for one account
(including an account in which the Investment Manager and its personnel may have a direct
or indirect interest) may receive more or less favourable prices or terms than another account,
and orders placed later may not be filled entirely or at all, based upon the prevailing market
prices at the time of the order or trade. In addition, some opportunities for reduced transaction
costs and economies of scale may not be achieved.
111
SPECIAL SECTION III – Alpha UCITS SICAV – Quantmetrics Multi Strategy Fund
This Special Section must be read in conjunction with the General Section of the Prospectus. This Special Section refers
only to the Alpha UCITS SICAV – Quantmetrics Multi Strategy Fund (the QM MS Fund or the Sub-fund).
Investment Objective The Quantmetrics Multi Strategy Fund's objective is to provide superior risk-adjusted
absolute returns on an ongoing basis for its shareholders.
Investment Strategy The investment strategies employed by the Sub-fund can be classified within the “managed
futures” category of absolute-return strategies: the Quantmetrics Multi Strategy Fund
employs a number of systematic, model-driven financial futures trading strategies that aim
to identify and exploit short-term mispricings in the developed financial futures markets.
The underlying assumption is that the behaviour of participants in futures’ markets
generates supply-demand imbalances on a regular basis. The causes of such short-term
mispricings can be (i) either recurring events or features impacting the mechanisms of
financial futures such as government bond auctions, futures expiries and roll-overs, cash
market open and closing times, the seasonality/time of the month etc. or (ii) price moves
leading market participants to behave in a certain way.
The investment strategies are implemented through proprietary quantitative models based
on statistical analysis of historical data.
The systematic implemention of the investment strategies minimises human biase in
investing and contributes to optimise risk management.
Investment Policy The Sub-fund invests in financial futures of developed markets. The futures contracts will
be traded directly by the Sub-fund, without entering into total return swaps or similar
financial derivatives instruments. The remaining assets will be held in cash deposits as well
as short-term OECD government bonds.
The Sub-Fund does not intend to invest in stocks or bonds of individual companies.
When required by conditions in the financial markets, the Sub-fund may invest all its assets
in term deposits or money market instruments in order to protect investors' interests.
Global Exposure The global exposure of the Sub-fund will be calculated on the basis of the absolute VaR
approach. The leverage of the Sub-fund calculated as the sum of the notionals of the
financial derivative instruments used is expected to range between 0% and 600% including
derivatives for currency hedging and between 0% and 500% excluding derivatives for
currency hedging. These ranges are not meant to be binding limits. In exceptional
circumstances the leverage of the Sub-Fund may temporarily be higher.
Additional Investment
Restrictions
In addition to the Investment Restrictions set out in Section 3 of the General Section, the
Quantmetrics Multi Strategy Fund will not invest more than 10% of its assets in UCIs or
UCITS.
Investment Manager The Management Company has entered into an investment management agreement (the
Investment Management Agreement) with Quantmetrics Capital Management LLP a
112
limited liability partnership incorporated under the laws of England and Wales under
number OC304666, and with registered offices at 1 Red Place, London, W1K 6PL.
Quantmetrics Capital Management LLP is an investment management company authorised
by the U.K. Financial Conduct Authority and registered with number 227068. The
Investment Management Agreement is governed by Luxembourg law and is entered into
for an unlimited period of time.
Quantmetrics Capital Management LLP has been appointed as Investment Manager with
full discretion, subject to the overall review and control of the Management Company, to
manage and invest the assets of the Sub-fund in accordance with the Investment Objectives,
Investment Policy and Investment Restrictions set out in this Prospectus.
The Investment Management Agreement may be terminated by either party upon a three
months' written notice. It may be terminated without notice in certain circumstances as set
out in the Investment Management Agreement.
Launch Date 4th May 2015.
Term Infinite.
Initial Offering Period The Initial Offering Period of the QM MS Fund was set from 24th April 2015 until and
including 30th April 2015. The Initial Subscription Price per Share was EUR 1,000 or
equivalent in any other Reference Currency of any Class.
Business Day Means each Luxembourg Banking Day.
Transaction Day Every Business Day.
Subscription Process Subscription requests for Shares of the QM MS Fund can be made to the Administrative
Agent on any day that is a Transaction Day starting as of the Launch Date or the Class
Launch Date.
Subscription requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Subscription Cut-Off Time)
one Business Day before the relevant Transaction Day at the latest. Subscription requests
(i) from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees
may also be submitted by swift or fax. Any applications for subscriptions received after the
Subscription Cut-Off Time will be valid for the following Transaction Day.
Subscriptions may be made only by investors who are not Restricted Persons by delivering
to the account of the Depositary cleared funds for the full amount of the subscription price
(plus any Subscription Fee if applicable) of the Shares being subscribed for pursuant to the
subscription request, (i) with respect to subscriptions from Institutional Investors, within 3
Business Days following the relevant Transaction Day, (ii) with respect to subscriptions
through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days following
the relevant Transaction Day and (iii) with respect to subscriptions directly to the Sub-fund
without going through Distributor(s), sub-distributor(s) or a nominee from investors other
113
than Institutional Investors, one Business Day before the Subscription Cut-Off of the
relevant Transaction Day.
Redemption Process Redemption requests for Shares in part or in whole can be made to the Administrative Agent
on any day that is a Transaction Day.
Redemption requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off Time)
one Business Day before the relevant Transaction Day at the latest. Redemption requests
(i) from Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees
may also be submitted by swift or fax. Any applications for redemptions received after the
Redemption Cut-Off Time will be valid for the following Transaction Day.
Payment of the redemption proceeds shall be made generally 3 Business Days following
the relevant Transaction Day.
EU Savings Directive In scope.
Distributor Initially the Company and the Management Company will appoint Quantmetrics Capital
Management LLP as Distributor for the Shares of the Quantmetrics Multi Strategy Fund.
The Distributor may appoint one or more reputable sub-distributors at its discretion.
Profile of the Typical
Investor
The QM MS Fund is considered a complex product. Investors in the QM MS Fund are
expected to:
have the knowledge of, and the investment experience in, financial products which
use derivatives and/or derivative strategies (such as the Sub-fund) and financial
markets generally; and
understand and can evaluate the strategy, characteristics and risks of the Sub-fund
in order to make an informed investment decision.
114
Classes of Shares Class A - EUR
Shares
Class A - USD
Shares
Class A - GBP
Shares
Class A - CHF
Shares
Class A - JPY
Shares
ISIN Codes LU1184914916 LU1184915137 LU1184915301 LU1184915640 LU******
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY 100,000,000
Minimum
Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
1.50% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark.
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
115
Classes of Shares Class B - EUR
Shares
Class B - USD
Shares
Class B - GBP
Shares
Class B - CHF
Shares
Class B - JPY
Shares
ISIN Codes LU1184916028 LU1184916291 LU1184916457 LU1184916531 LU*****
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 10,000 USD 10,000 GBP 10,000 CHF 10,000 JPY 1,000,000
Minimum
Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Subscription Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Redemption Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
2.0% p.a. of the
Net Asset Value
2.0% p.a. of the
Net Asset Value
2.0% p.a. of the
Net Asset Value
2.0% p.a. of the
Net Asset Value
2.0% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark ,
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Subscription Tax
(Taxe d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
116
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Classes of Shares Class C* - EUR
Shares
Class C* - USD
Shares
Class C* - GBP
Shares
ISIN Codes LU1184916960 LU1184917182 LU1184917265
Reference Currency
of the Share Class EUR USD GBP
Minimum
Subscription Amount EUR 10,000 USD 10,000 GBP 10,000
Minimum
Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 1,000
Subscription Fee Nil Nil Nil
Redemption Fee Nil Nil Nil
Eligible Investors Authorised
Investors *
Authorised
Investors *
Authorised
Investors *
Investment
Management Fee Nil Nil Nil
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price EUR 1,000 USD 1,000 GBP 1,000
* Class C shares are reserved for the Investment Manager and its staff, for the Directors, for affiliates or any other investors at
the discretion of the Board of Directors.
117
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D - JPY
Shares
ISIN Codes LU1210451255 LU1210451503 LU1210451768 LU1210451925 LU1210452147
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Minimum
Subsequent
Subscription Amount
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Subscription Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Redemption Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Institutional and
Retail Investors
Investment
Management Fee
Up to 2.50% p.a.
of the Net Asset
Value
Up to 2.50% p.a.
of the Net Asset
Value
Up to 2.50% p.a.
of the Net Asset
Value
Up to 2.50% p.a.
of the Net Asset
Value
Up to 2.50% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
0.05% of the Net
Asset Value
118
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D - JPY
Shares
ISIN Codes LU1210451255 LU1210451503 LU1210451768 LU1210451925 LU1210452147
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Classes of Shares Class E - EUR
Shares
Class E - USD
Shares
Class E - GBP
Shares
Class E - CHF
Shares
Class E - JPY
Shares
ISIN Codes LU1184917422 LU1184917695 LU1184917851 LU1184917935 LU******
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY 100,000,000
Minimum
Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
0.75% p.a. of the
Net Asset Value
0.75% p.a. of the
Net Asset Value
0.75% p.a. of the
Net Asset Value
0.75% p.a. of the
Net Asset Value
0.75% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water Mark
119
Classes of Shares Class E - EUR
Shares
Class E - USD
Shares
Class E - GBP
Shares
Class E - CHF
Shares
Class E - JPY
Shares
ISIN Codes LU1184917422 LU1184917695 LU1184917851 LU1184917935 LU******
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
ISIN Codes LU1184918230 LU1184918404 LU1184918586 LU1184918743 LU1184918826
Reference Currency of
the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
EUR
25,000,000
USD 25,000,000 Up to GBP
12,500,000
Up to CHF
50,000,000
Up to JPY
5,000,000,000
Minimum Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 EUR 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
1.25% p.a. of
the Net Asset
Value
1.25% p.a. of the
Net Asset Value
1.25% p.a. of the
Net Asset Value
Up to 1.5% p.a. of
the Net Asset
Value
Up to 1.5% p.a. of
the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
Up to 20% of the
Net Profit above
Up to 20% of the
Net Profit above
Up to 20% of the
Net Profit above
Up to 20% of the
Net Profit above
120
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
above the High
Water Mark
the High Water
Mark
the High Water
Mark
the High Water
Mark
the High Water
Mark
Servicing Fee** 0.05% p.a. of
the Net Asset
Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Classes of Shares Class N -
GBP Shares
Class O - EUR
Shares
Class P Shares Class Q Shares Class R Shares
ISIN Codes LU1247534909 LU1268617377 LU****** LU****** LU******
Reference Currency of
the Share Class
GBP EUR To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Minimum Subscription
Amount
GBP 500,000 EUR 25,000,000 To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Minimum Subsequent
Subscription Amount
GBP 5,000 EUR 10,000 To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Subscription Fee Nil Nil Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Redemption Fee Nil Nil Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Eligible Investors Institutional and
Retail Investors
Institutional
Investors
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Investment
Management Fee
0.75% of the Net
Asset Value
0.75% of the Net
Asset Value
Up to 3.0% p.a. of
the Net Asset
Value
Up to 3.0% p.a. of
the Net Asset
Value
Up to 3.0% p.a. of
the Net Asset
Value
121
Management Company Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
20% of the Net
Profit above the
High Water Mark
Servicing Fee** 0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
0.05% p.a. of the
Net Asset Value
Distribution Policy Accumulation
Class
Accumulation
Class
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Subscription Tax (Taxe
d'Abonnement)
0.05% of the Net
Asset Value
0.01% of the Net
Asset Value
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
Initial Subscription
Price
GBP 1,000 EUR 1,000 To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
To be determined
on Class Launch
Date
** Servicing Fee subject to a minimum of EUR 5,000 per month at the level of the Sub-fund.
Reference Currency and
Hedging
The Reference Currency of the Quantmetrics Multi Strategy Fund is the USD.
In relation to Classes that are denominated in a currency other than the Reference Currency
of the Sub-fund, the Management Company and/or the Investment Manager may employ
techniques and instruments intended to provide protection (full or partial, as the case may
be) so far as possible against movements of the currency in which the relevant Class is
denominated against movements in the Reference Currency of the Sub-fund. All costs and
gains/losses of such hedging transactions are borne separately by the respective Classes.
These Classes will not be leveraged as a result of such currency exposure. Although the
Management Company and/or the Investment Manager intends to utilise such currency
hedging transactions in respect of the Classes of the Sub-fund that are not denominated in
the Reference Currency of the Sub-fund, it shall not be obliged to do so.
Likewise, in relation to investments that are denominated in a currency other than the
currency of any particular Class of Shares, the Management Company and/or the
Investment Manager may decide (but is not obliged) to enter into hedging transactions so
as to mitigate the risk borne by the holder of that Class arising out of (adverse) currency
exchange rate changes.
Performance Fee The Investment Manager will also be entitled to a Performance Fee from the Fund
calculated on a Share-by-Share basis so that each Share is charged a Performance Fee
which equates precisely with that Share’s performance. This method of calculation ensures
that (i) any Performance Fee paid to the Investment Manager is charged only to those
Shares which have appreciated in value, (ii) all holders of Shares of the relevant class have
122
the same amount of capital per Share at risk in the Fund, and (iii) all Shares of the relevant
class have the same Net Asset Value per Share.
For each Calculation Period (as defined below), the Performance Fee in respect of each
Class will be equal to 20% of any appreciation in the Net Asset Value per Share (prior to
reduction of any accrued Performance Fee) of such Class during that Calculation Period
above the High Water Mark (as defined below) of that Share, as measured at the end of the
Calculation Period (the Net Profit). The Performance Fee in respect of each Calculation
Period will be calculated by reference to the Net Asset Value before deduction for any
accrued Performance Fee.
The Performance Fee is normally payable to the Investment Manager in arrears at the end
of each Calculation Period within seven Business Days after the end of such Calculation
Period. However, in the case of Shares redeemed during a Calculation Period, the
Performance Fee in respect of those Shares will be calculated as if the date of redemption
of such Shares were the end of the Calculation Period and will become payable
immediately after the relevant Transaction Day.
If the Quantmetrics Multi Strategy Fund is terminated before the end of a Calculation
Period, the Performance Fee in respect of the Calculation Period will be calculated and
paid as though the date of termination were the end of the relevant Calculation Period.
Transfers of Shares will be treated as redemption and subscription for Performance Fee
calculation purposes.
Calculation Period Each calendar quarter, commencing as of the day following the last day of the preceding
Calculation Period for the Share and ending as of the last Business Day of such calendar
quarter is a Calculation Period.
In case of a launch during a calendar quarter, the initial Calculation Period in respect of
any Class will commence on the Launch Date or the Class Launch Date and end on the last
Business Day of the calendar quarter in which such Launch Date or Class Launch Date
occurs.
High Water Mark
(“HWM”) In respect of each Class of Shares the HWM is the greater of (i) the Net Asset Value per
Share of the relevant Class as of Launch Date or Class Launch Date and (ii) the highest
Net Asset Value per Share of the relevant Class in respect of which a Performance Fee has
been paid at the end of any previous Calculation Period (if any) adjusted for subsequent
subscriptions/redemptions by the following formula: [(HWM at previous NAV date x total
Shares at previous NAV date) – (HWM of previous NAV date x redeemed Shares) +
(subscribed Shares x previous NAV)] / total Shares in issue at NAV date = HWM at NAV
date. The effect of the adjusted HWM is to provide an equalisation mechanism to minimise
disparities between investors subscribing and redeeming from the Sub-fund without the
need to issue/redeem equalisation Shares. If a performance fee has never been paid, the
High Water Mark is the inception price of the relevant Share Class adjusted by subsequent
subscriptions/redemptions.
If any Shares are redeemed during the Calculation Period, the cumulative Performance Fee
accrued during this Calculation Period, in respect of those Shares, shall be crystallised and
become payable to the Investment Manager.
123
Specific Risk Factors Investors should carefully review the risk factors set out in Section 19 of the General
Section before investing in the Quantmetrics Multi Strategy Fund. In addition, Investors
should carefully review the following risk factors that are specific to the Sub-fund:
No secondary market. It is not anticipated that there will be an active secondary market for
such Shares.
Effects of Substantial Redemptions. Substantial redemptions of Shares could require the
Company to liquidate positions more rapidly than would otherwise be desirable, which
could adversely affect the trading performance of the Sub-fund and even cause its
liquidation.
Completeness of Risk Factors. The foregoing list of risk factors is not complete.
Prospective investors should consult with their own advisers before deciding to subscribe
for Shares of the Sub-fund.
124
SPECIAL SECTION IV – Alpha UCITS SICAV – Cube Global Opportunities Fund
This Special Section must be read in conjunction with the General Section of the Prospectus. This Special Section refers
only to the Alpha UCITS SICAV – Cube Global Opportunities Fund (the Cube Global Opportunities Fund or the Sub-
fund).
Investment Objective The Cube Global Opportunities Fund's objective is to generate long term capital appreciation
via long and short investments of both equity and debt across the capital structure of selected
companies.
Investment Strategy The Cube Global Opportunities Fund seeks to achieve the investment objective by investing
in a range of financial instruments, which the Investment Manager believes are incorrectly
valued by the market. The Investment Manager believes that there are certain types of
situations that can often give rise to particularly attractive investment opportunities. As a
result, the Investment Manager’s research and investment efforts are often focused on
countries and sectors where it believes some of these conditions exist. In particular, the
Investment Manager is interested in what it refers to as “dislocated markets”. Dislocated
markets are groups of securities (typically defined by their sector, sub-sector, or country of
listing or exposure, or a combination of these) where the supply and demand for the relevant
securities has been disrupted by an event (or series of events). In dislocated markets, the event
changes the perception of risks related to the securities and leads many of the existing holders
of the securities to decide that they are unable to tolerate or unable to evaluate the risks as
they perceive them after the event. This leads them to wish to exit their positions in the
securities, with price and valuation concepts becoming less important. Sometimes there may
be an element of forced selling in these situations. These events can come from a wide range
of sources including regulatory change, changes in industry structure or behaviour, changes
in the financial system or the behaviour of participants in the financial system, natural events
and changes in technology to name a few. Often the event, by its nature, can involve some
challenges in analysis and there may be few new investors immediately willing to step into
the gap. The Investment Manager believes that these situations often lead to significant
discrepancies between the price of securities and their fundamental value, and hence create
attractive opportunities.
The financial instruments in which the Sub-fund invests will typically be equity and debt
securities, but can also include financial derivative instruments and other financial
instruments. The perceived opportunities may either be on the long side or the short side. The
opportunities may be based on relative valuation discrepancies between one security and
another security at the same point in time, or between the current valuation of a security and
the valuation that the Investment Manager believes is likely to apply in future (i.e. relative
value or absolute value).
The Cube Global Opportunities Fund may invest in all parts of the capital structure of
companies including equities, bonds and hybrid securities such as convertible bonds, as well
as derivatives. As the scale, relative proportions and nature of such opportunities will
constantly evolve, the Investment Manager will have full discretion to determine the
allocation of the Sub-fund’s resources between countries, sectors asset classes and strategies
on an opportunistic basis, with a view to optimising the risk/return profile of the Sub-fund.
In order to achieve a level of diversification and to reduce portfolio risk, the Investment
Manager intends to invest in securities in a number of different markets and sectors that it
believes offers the opportunity for attractive returns. The investment universe is world-wide,
with a focus on developed markets. However, the Investment Manager also expects that it will
125
often focus on certain markets and sectors where it believes significant pricing anomalies exist
and hence the exposures of the Sub-fund may have large areas of concentration. This will give
it exposures that are different to those of a fund which seeks to have very broadly diversified
exposures to all sectors of the market. The Investment Manager believes this to be a potential
source of advantage to investors in the Sub-fund.
The Sub-fund may invest up to 5% of its assets in American depositary receipts (ADRs),
global depositary receipts (GDRs), asset backed securities (ABS), CoCos and up to 10% in
REITs.
Investment Policy The Investment Manager seeks to identify attractive investments primarily through
fundamental analysis. This includes both the analysis of factors impacting the sector to which
a security is exposed as well as of factors impacting the issuer and the security itself. The
analysis often aims to allow the Investment Manager to form a view on the likelihood of
various future events that may impact the valuation of the security. The nature of the analysis
it conducts differs depending on the security and the issues that the Investment Manager
considers to be important in relation to the security at the relevant time. In addition to primary
published information and contact with the companies concerned, broker research and other
sources of secondary information may be used to inform this analysis. The level of analysis
done on individual points may vary depending on which factors the Investment Manager
considers to be most relevant for the particular sub-sector or security.
The Investment Manager seeks to invest in a range of securities in order to diversify and to
reduce the impact on the portfolio of unanticipated events or changes in market sentiment
impacting disproportionately on a single stock or single sub-sector. Individual positions are
also sized to take into account prevailing market liquidity for individual securities so that the
Investment Manager has what is believes to be adequate flexibility to manage the portfolio in
the light of changes to its investment views or redemption requests from investors.
The Investment Manager sets internal limits from time to time on different types of exposures
as a way to limit risks. It may make use of leverage at times to increase the potential returns
of the portfolio. However, it also recognizes that this can also act to amplify losses and creates
increased risk arising from potential changes in market liquidity. The Manager therefore sets
limits on leverage and gross and net exposures with this in mind.
Global Exposure The Sub-fund will use the absolute Value-at-Risk (“VaR”) methodology and stress testing
measures to monitor its global exposure.
Global exposure of the Sub-fund is monitored using long, short, gross and net delta and beta
adjusted metrics and is monitored on a real time basis with frequent in depth analysis
performed.
The Sub-fund will make use of embedded leverage such as options, short sales via CFDs,
swaps and forwards. The use of leverage will allow the Sub-fund to make additional
investments, thereby increasing its exposure to assets, such that its total assets may be greater
than its capital. The Leverage of the Sub-fund (calculated as the sum of the notionals of the
financial derivative instruments used) is typically expected to range between 80% and 280%
including currency derivatives used for hedging purposes and between 80% and 180% of the
Sub-fund's NAV excluding currency derivatives used for hedging purposes . These ranges are
126
not meant to be binding limits. The leverage of the Sub-fund may fluctuate above the typical
range due to additional hedging requirements dependant on market conditions and portfolio
positioning.
Additional Investment
Restrictions
In addition to the Investment Restrictions set out in Section 3 of the General Section, the Cube
Global Opportunities Fund will not invest more than 10% of its assets in UCIs or UCITS.
Investment Manager The Management Company has entered into an investment management agreement (the
Investment Management Agreement) with Cube Capital Investment Management Limited,
a limited liability company incorporated under the laws of England and Wales, with registered
offices at 4th floor, 180 Great Portland St., London W1W 5QZ. Cube Capital Investment
Management Limited is an investment management company authorised by the Financial
Conduct Authority and registered with number 613547. The Investment Management
Agreement is governed by Luxembourg law and is entered into for an unlimited period of
time.
Cube Capital Investment Management Limited has been appointed as Investment Manager
with full discretion, subject to the overall review and control of the Management Company,
to manage and invest the assets of the Sub-fund in accordance with the Investment Objectives,
Investment Policy and Investment Restrictions set out in this Prospectus.
The Investment Management Agreement may be terminated by either party upon a three
months' written notice. It may be terminated without notice in certain circumstances as set out
in the Investment Management Agreement.
Launch Date 1 February 2016 or such later date as decided by the Board. Investors will be notified of any
decision to postpone the Launch Date and of the new Launch Date.
Term Infinite.
Initial Offering Period The Initial Offering Period of the Cube Global Opportunities Fund is set from 15 January
2016 until and including 1 February 2016. The Board may, at its discretion, extend the Initial
Offering Period for a period of a maximum of two months. In this case, investors will be
notified of any such decision and of the end date of the Initial Offering Period. Subscription
requests during the Initial Offering Period must be sent in writing to the Administrative Agent
and be received by the Administrative Agent during the Initial Offering Period and up to the
last day by 3.00 p.m. (Luxembourg time). The Initial Subscription Price per Share will be
USD 1,000 or equivalent in any other Reference Currency of any Class. The Initial
Subscription Price must be paid on or before the Launch Date.
Investors for which the Subscription Documents have been accepted on the last day of the
Initial Offering Period will be required to deliver to the account of the Depositary cleared
funds for the full amount of their subscription pursuant to their Subscription Documents on
the Launch Date. If the Depositary does not receive the funds in time the purchase order may
be cancelled and the funds returned to the Investor without interest.
Subscribers will be liable for the costs of late or non-payment in which case the Management
Company will have the power to redeem all or part of the Investor's holding of Shares in the
Cube Global Opportunities Fund (if any) in order to meet such costs (including redemption,
127
subscription and trading costs if any). In circumstances where the Management Company at
its absolute discretion regards it not practical or feasible to recoup a loss from an applicant for
Shares, any losses incurred by the Cube Global Opportunities Fund due to late or non-payment
of the subscription proceeds in respect of subscription applications received will be borne by
the Cube Global Opportunities Fund.
Business Day Means each Luxembourg and London Banking Day and a day on which banks are generally
open for business in London and Luxembourg (excluding Saturdays and Sundays and public
holidays).
Transaction Day Every Wednesday. Should a Wednesday not be Business Day, the following day which is a
Business Day
Subscription Process Subscription requests for Shares of the Cube Global Opportunities Fund can be made to the
Administrative Agent on any day that is a Transaction Day starting as of the Launch Date or
the Class Launch Date.
Subscription requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Subscription Cut-Off Time) two
Business Days before the relevant Transaction Day at the latest. Subscription requests (i) from
Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may also
be submitted by swift or fax. Any applications for subscriptions received after the
Subscription Cut-Off Time will be valid for the following Transaction Day.
Subscriptions may be made only by investors who are not Restricted Persons by delivering to
the account of the Depositary cleared funds for the full amount of the subscription price (plus
any Subscription Fee if applicable) of the Shares being subscribed for pursuant to the
subscription request, (i) with respect to subscriptions from Institutional Investors, within 3
Business Days following the relevant Transaction Day, (ii) with respect to subscriptions
through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days following the
relevant Transaction Day and (iii) with respect to subscriptions directly to the Company
without going through Distributor(s), sub-distributor(s) or a nominee from investors other
than Institutional Investors, on the relevant Transaction Day prior to the relevant Subscription
Cut-Off Time.
Redemption Process Redemption requests for Shares in part or in whole can be made to the Administrative Agent
on any day that is a Transaction Day.
Redemption requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off Time) two
Business Days before the relevant Transaction Day at the latest. Redemption requests (i) from
Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may also
be submitted by swift or fax. Any applications for redemptions received after the Redemption
Cut-Off Time will be valid for the following Transaction Day.
Payment of the redemption proceeds shall be made generally 3 Business Days following the
relevant Transaction Day.
128
EU Savings Directive In scope.
Distributor Initially the Company and the Management Company will appoint Cube Capital Investment
Management Limited as Distributor for the Shares of the Cube Global Opportunities Fund.
The Distributor may appoint one or more reputable sub-distributors at its discretion.
Profile of the Typical
Investor
The Cube Global Opportunities Fund is considered a complex product. Investors in the Cube
Global Opportunities Fund are expected to:
have the knowledge of, and the investment experience in, financial products which use
derivatives and/or derivative strategies (such as the Sub-fund) and financial markets
generally; and
understand and can evaluate the strategy, characteristics and risks of the Sub-fund in order
to make an informed investment decision.
129
Classes of Shares Class A - EUR
Shares
Class A - USD
Shares
Class A - GBP
Shares
Class A - CHF
Shares
Class A - JPY
Shares
ISIN Codes LU1281782109
LU1281782281 LU1281782364
LU1281782448
LU1281782521
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 2 % p.a.
of the Net Asset
Value
Up to 2 % p.a.
of the Net Asset
Value
Up to 2 % p.a.
of the Net Asset
Value
Up to 2 % p.a.
of the Net Asset
Value
Up to 2 % p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
130
Classes of Shares Class B - EUR
Shares
Class B - USD
Shares
Class B - GBP
Shares
Class B - CHF
Shares
Class B - JPY
Shares
ISIN Codes LU1281782794
LU1281782877
LU1281782950
LU1281783099
LU1281783172
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 50,000 USD 50,000 GBP 50,000 CHF 50,000 JPY 500,000
Minimum
Subsequent
Subscription
Amount
EUR 5,000 USD 5,000 GBP 5,000 CHF 5,000 JPY 50,000
Subscription Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Redemption Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional and
Retail Investors
Investment
Management Fee
Up to 2.0% p.a.
of the Net Asset
Value
Up to 2.0% p.a.
of the Net Asset
Value
Up to 2.0% p.a.
of the Net Asset
Value
Up to 2.0% p.a.
of the Net Asset
Value
Up to 2.0% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe
d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
131
Classes of Shares Class C* -
EUR Shares
Class C* -
USD Shares
Class C* - GBP
Shares
ISIN Codes LU1281783339
LU1281783412
LU1281783503
Reference Currency
of the Share Class
EUR USD GBP
Minimum
Subscription
Amount
EUR 50,000 USD 50,000 GBP 25,000
Minimum
Subsequent
Subscription
Amount
EUR 5,000 USD 5,000 GBP 5,000
Subscription Fee Nil Nil Nil
Redemption Fee Nil Nil Nil
Eligible Investors Authorized
Investors *
Authorized
Investors *
Authorized
Investors *
Investment
Management Fee
Nil Nil Nil
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000
* Class C shares reserved to the Investment Manager, the Directors and to the staff of the Investment
Manager and its affiliates or to any other investors at the discretion of the Board of Directors.
132
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D - JPY
Shares
ISIN Codes LU1281783685
LU1281783768
LU1281783842
LU1281783925
LU1281784063
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Redemption Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional
and Retail
Investors
Institutional and
Retail Investors
Investment
Management Fee
Up to 2.50%
p.a. of the Net
Asset Value
Up to 2.50%
p.a. of the Net
Asset Value
Up to 2.50%
p.a. of the Net
Asset Value
Up to 2.50%
p.a. of the Net
Asset Value
Up to 2.50% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
20% of the Net
Profit above the
High Water
Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
133
Classes of Shares Class E*** -
EUR Shares
Class E*** -
USD Shares
Class E*** -
GBP Shares
Class E*** -
CHF Shares
Class E*** - JPY
Shares
ISIN Codes LU1281784147
LU1281784220
LU1281784493
LU1281784659
LU1281784733
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 0.75%
p.a. of the Net
Asset Value
Up to 0.75%
p.a. of the Net
Asset Value
Up to 0.75%
p.a. of the Net
Asset Value
Up to 0.75%
p.a. of the Net
Asset Value
Up to 0.75% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
134
Classes of Shares Class M**** -
EUR Shares
Class M **** -
USD Shares
Class M**** -
GBP Shares
Class M**** -
CHF Shares
Class M**** -
JPY Shares
ISIN Codes LU1281784816
LU1281784907
LU1281785037
LU1281785201
LU1281785383
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 1% p.a.
of the Net Asset
Value
Up to 1% p.a.
of the Net Asset
Value
Up to 1% p.a.
of the Net Asset
Value
Up to 1% p.a.
of the Net Asset
Value
Up to 1% p.a. of
the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
135
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
ISIN Codes LU1281785466
LU1281785540
LU1281785623
LU1281785896
LU1281785979
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
Up to EUR
50,000,000
Up to USD
50,000,000
Up to GBP
50,000,000
Up to CHF
50,000,000
Up to JPY
5,000,000,000
Minimum Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of the
Net Profit above
the High Water
Mark
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 1,000
136
Classes of Shares Class N*****
Shares
Class O*****
Shares
Class P*****
Shares
Class Q*****
Shares
Class R*****
Shares
ISIN Codes LU****** LU****** LU****** LU****** LU******
Reference Currency
of the Share Class
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum
Subscription Amount
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum Subsequent
Subscription Amount
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Subscription Fee Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Redemption Fee Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Eligible Investors To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Investment
Management Fee
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of the
Net Profit above
the High Water
Mark
Servicing Fee** Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Distribution Policy To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
137
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
** Servicing Fee subject to a minimum of up to EUR 7,500 per month at the level of the Sub-fund.
*** Class E Shares will be available for subscription to investors until the total assets under management
of the Sub-fund reach EUR 100 million (or the equivalent in aggregate in the reference currencies of the
relevant Classes). The Board will inform investors of the date on which Class E Shares will be closed for
subscription.
**** Class M shares can only be subscribed on launch date until the total assets under management of
the Sub-fund reach EUR 30 million (or the equivalent in aggregate in the reference currencies of the
relevant Classes).
***** Class N, Class O, Class P, Class Q and Class R Shares will be available to authorised Investors
following Board of Directors resolution.
138
Reference Currency and
Hedging
The Reference Currency of the Cube Global Opportunities Fund is the USD.
In relation to Classes that are denominated in a currency other than the Reference Currency
of the Sub-fund, the Management Company and the Investment Manager may employ
techniques and instruments intended to provide protection (full or partial, as the case may be)
so far as possible against movements of the currency in which the relevant Class is
denominated against movements in the Reference Currency of the Cube Global Opportunities
Fund. All costs and gains/losses of such hedging transactions are borne separately by the
respective Classes. These Classes will not be leveraged as a result of such currency exposure.
Although the Management Company and/or the Investment Manager intends to utilise such
currency hedging transactions in respect of the Classes of the Cube Global Opportunities
Fund that are not denominated in the Reference Currency of the Cube Global Opportunities
Fund, it shall not be obliged to do so.
Likewise, in relation to investments that are denominated in a currency other than the
currency of any particular Class of Shares, the Management Company and the Investment
Manager may decide (but is not obliged) to enter into hedging transactions so as to mitigate
the risk borne by the holder of that Class arising out of (adverse) currency exchange rate
changes.
Performance Fee The Investment Manager will also be entitled to a Performance Fee from the Fund calculated
on a Share-by-Share basis so that each Share is charged a Performance Fee which equates
precisely with that Share’s performance. This method of calculation ensures that (i) any
Performance Fee paid to the Investment Manager is charged only to those Shares which have
appreciated in value, (ii) all holders of Shares of the relevant class have the same amount of
capital per Share at risk in the Fund, and (iii) all Shares of the relevant class have the same
Net Asset Value per Share.
For each Calculation Period (as defined below), the Performance Fee in respect of each Class
will be equal to a percentage (as defined above in the Share Class table in “Performance Fee”
section) of any appreciation in the Net Asset Value per Share (prior to reduction of any
accrued Performance Fee) of such Class during that Calculation Period above the High Water
Mark (as defined below) of that Share, as measured at the end of the Calculation Period (the
Net Profit). The Performance Fee in respect of each Calculation Period will be calculated by
reference to the Net Asset Value before deduction for any accrued Performance Fee.
The Performance Fee is normally payable to the Investment Manager in arrears at the end of
each Calculation Period within seven Business Days after the end of such Calculation Period.
However, in the case of Shares redeemed during a Calculation Period, the Performance Fee
in respect of those Shares will be calculated as if the date of redemption of such Shares were
the end of the Calculation Period and will become payable immediately after the relevant
Transaction Day.
If the Cube Global Opportunities Fund is terminated before the end of a Calculation Period,
the Performance Fee in respect of the Calculation Period will be calculated and paid as though
the date of termination were the end of the relevant Calculation Period.
Calculation Period Each quarterly period commencing as of the day following the last day of the preceding
Calculation Period for the Share and ending as of the last Business Day of such calendar
quarter is a Calculation Period.
139
In case of a launch during a calendar quarter, the initial Calculation Period in respect of any
Class will commence on the Launch Date or the Class Launch Date and end on the last
Business Day of the calendar quarter in which such Launch Date or Class Launch Date
occurs.
High Water Mark In respect of each Class of Shares the greater of (i) the Net Asset Value per Share of the
relevant Class as of Launch Date or Class Launch Date and (ii) the highest Net Asset Value
per Share of the relevant Class in respect of which a Performance Fee has been paid at the
end of any previous Calculation Period (if any).
Specific Risk Factors Investors should carefully review the risk factors set out in Section 19 of the General Section
before investing in the Sub-fund. In addition, Investors should carefully review the following
risk factors that are specific to the Sub-fund:
Operating History
Past performance of the Investment Manager is not necessarily indicative of future
performance. No assurance can be made that profits will be achieved or that substantial
losses will not be incurred by the Sub-fund.
Nature of Investments
An investment in the Sub-fund will involve a high degree of financial risk. The Sub-fund
will invest in highly speculative investment strategies. The performance of the Sub-fund will
depend in a large part on the Investment Manager’s ability to identify and exploit relevant
opportunities and also on factors outside of the Investment Manager’s control and/or which
cannot be accurately predicted, including proper performance of third parties of their
contractual duties. Identification and exploitation of such opportunities involves uncertainty
and there can be no assurance that the Sub- fund's investment objective will be realised or
that Investors will receive any return on their investment.
Reliance on Investment Manager
Although the Board has the ultimate authority and responsibility for the management of the
Sub-fund, all decisions relating to the investment of the Fund's assets have been delegated to,
and will be made by, the Investment Manager, who will therefore have trading authority over
the Sub-fund in compliance with the terms and within the limits set out under the Investment
Management Agreement, this Prospectus and the Articles. The Fund's expertise in trading is
therefore largely dependent on the Investment Manager and the services and skills of its
officers and employees. The loss of the Investment Manager's services (or that of one of its
key personnel) could materially and negatively impact the value of the Sub-fund as it may
lead to the loss of the use of any proprietary investment methodology developed by the
Investment Manager. Investors will have no right or power to take part in the management of
the Sub-fund.
Third Party Interests
The Sub-fund may acquire non-controlling interests in investee entities. In such instances,
the Sub-fund will, where possible, seek to guide and oversee the management of investee
companies through board participation, supervisory, audit and oversight committees and
140
entering into shareholders’ agreements and other means of exercising financial controls and
protecting minority shareholders’ rights. The fact that the Sub-Fund may be interested in
minority equity positions, and may be required to use nominees to hold certain investments,
or accept certain business or other arrangements that are not commonly recognised or
possibly difficult to enforce or are not enforceable under current laws, may mean the Sub-
fund’s ability to protect its investments is limited. The Sub-fund will not participate in activist
trading.
Operating Expenses and Deficits
The expenses of operating the Sub-fund may exceed the Sub-fund's income, thereby requiring
that the difference be paid out of the Sub-fund’s capital, reducing the value of the Sub-fund's
investments and potential for profitability. The Sub-fund’s operating expenses may also be
higher than other funds operating in more mature markets, primarily because of the additional
time and expense required to pursue the Sub-fund’s investment objectives.
Investment Risks
US Tax Treatment and Reporting Requirement of US Persons
The Sub-fund expects, as a result of the nature of its assets, that it will be treated as a passive
foreign investment company (“PFIC”) for U.S. federal income tax purposes and that most of
the funds in which it invests, also due to the nature of their assets, will also be treated as
PFICs. As a result, investors who are US persons for U.S. tax purposes (“U.S. Shareholders”)
and subject to tax will have certain adverse tax consequences. In addition, all US
Shareholders investing in the Fund will have obligations to report certain information to the
US Internal Revenue Service. The Sub-fund makes no commitment or representation that it
will provide shareholders with the information necessary to comply with these reporting
obligations. Failure to meet these reporting obligations can have adverse consequences to
US persons, including resulting in any applicable federal statute of limitation on an entire tax
return being extended indefinitely.
Competition and Supply
The Sub-fund’s success will depend, in part, on the Investment Manager’s ability to identify
opportunities consistent with its strategy. By definition, such opportunities are rare and, in
making such investments, the Sub-fund may have to compete with a spectrum of other
investors, many of which may have more extensive resources and/or a more established
reputation. Increased competition may limit the investment opportunities made by the Sub-
fund or make the investment terms available to the Sub-fund less favourable, thereby limiting
returns to investors.
Investment Manager’s Discretion and Changes in Portfolio Strategy
The Investment Manager is not limited to trading any specific instruments or pursuant to any
specific investment or trading strategies. As a result, it is possible that the nature and
character of the Sub-fund’s investment portfolio may change substantially from time to time
based on the Investment Manager’s view of where opportunities exist in the global market
place. Furthermore, as a result of the Sub-fund’s opportunistic investment strategy, the
expenses, risks, volatility and returns to the Fund could vary significantly from time to time,
depending on the investment strategy utilised by the Fund at any particular time.
141
Market Risk and Insider Trading
Any investment made in a specific group of securities is exposed to the universal risks of the
securities market. However, there can be no guarantee that losses equivalent to or greater than
the overall market will not be incurred as a result of investing in such securities. From time
to time the Investment Manager or its affiliates may also be in possession of material non-
public information concerning actual or potential investments which may limit the ability of
the Sub-fund to deal in such investments. Accordingly, the Sub-fund may be prevented from
dealing in investments at a time when the Investment Manager might otherwise wish the Sub-
fund to do so.
International Investing and Taxation
The Sub-fund will invest on a global basis in both developed and emerging markets. In doing
so, the Fund will be subject to:
● currency exchange rate risk;
● the possible change in taxation treatment of the Sub-fund or of the Sub- fund’s
investments, including but not limited to withholding, income or excise taxes;
● the absence of uniform accounting, auditing and financial reporting standards,
practices, and disclosure requirements and little or potentially biased government
supervision and regulation; and
● economic and political risks, including expropriation, government intervention,
currency exchange control and potential restrictions on investment and repatriation of
capital.
In addition, investing in international and emerging markets may subject the Sub-fund to a
number of unusual risks including inadequate (legal and regulatory) investor protection,
incomplete and changing laws, ignorance or breaches on the part of other market participants,
lack of established or effective legal avenues for legal redress and lack of standard practices.
There can be no assurance that this difficulty in protecting and enforcing rights will not have a
material adverse effect on the Sub-fund.
Whilst the Investment Manager on behalf of the Sub-fund will endeavour to structure
Investments in a tax efficient manner, there will be no guarantee that the anticipated tax treatment
of a particular investment will be achieved or that the tax status of an investment will continue
until such investments are realised.
142
SPECIAL SECTION V – Alpha UCITS SICAV – Fair Oaks Dynamic Credit Fund
This Special Section must be read in conjunction with the General Section of the Prospectus. This Special Section refers
only to the Alpha UCITS SICAV – Fair Oaks Dynamic Credit Fund (the Fair Oaks Fund or the Sub-fund).
Investment Objective The Fair Oaks Fund's objective is to seek to generate attractive risk-adjusted returns primarily
by investing in and managing dynamically a portfolio of European and US debt securities on
a long-only and liquid basis.
Investment Strategy The core principle of the Fair Oaks Fund’s strategy is to identify attractive risk-adjusted
investment opportunities by focusing on the fundamental credit quality of debt securities via
a bottom-up credit analysis and rigorous due diligence.
The Investment Manager has a dedicated research team responsible for analysing
collateralised loan obligations and corporate issuers and producing the necessary modelling
inputs (such as default rate and timing expectations and recovery assumptions) for the
analytical and risk management models. The principals of the Investment Manager also have
long and established relationships with all key participants in the collateralised loan obligation
markets, including arrangers, managers, traders and research providers which will support the
effective sourcing of investment opportunities.
Investments are analysed across various scenarios and stress tests including stressed economic
environments.
The Investment Manager seeks to optimise returns through a careful asset allocation and a
dynamic management of the portfolio taking into consideration default risk, price risk and
other possible risks.
Investment Policy The Fair Oaks Fund seeks to achieve its investment objective by investing primarily in
collateralised loan obligations and corporate bonds on a long-only and liquid basis.
The underlying credit exposure of the Fair Oaks Fund is restricted to European and U.S. assets.
The Fair Oaks Fund shall not invest in Emerging Markets assets.
The Investment Manager is able to pursue investment opportunities in corporate bonds and
collateralised loan obligations, backed by corporate debt, without allocation constraints.
The Fair Oaks Fund may only invest in debt securities that have a credit rating. At least 50%
of the Sub-fund’s portfolio must be invested in cash and debt securities with an investment
grade rating. The Sub-fund may not purchase securities with a long term rating below B- (or
equivalent).
The Fair Oaks Fund may from time to time invest up to a maximum of 50% of its portfolio in
financial derivative instruments (including, without limitation, credit default swaps that
reference European and U.S. corporate issuers or corporate debt indices) and up to a maximum
of 10% of its portfolio in exchange traded funds for investment purposes.
Notwithstanding the above, the Fair Oaks Fund may invest in financial derivative instruments
including, without limitation, currency forwards and options and interest rate futures to hedge
exposure according to the Investment Manager’s market view. The Fair Oaks Fund may also
enter into repurchase agreements and/or reverse repurchase agreements in compliance with
the limits set forth under Section 3.29 to 3.42 of the General Section.
143
In certain market conditions the Sub-fund may hold up to 100% of its portfolio in cash, high
quality government bonds and other instruments similar to cash.
Global Exposure The Sub-fund will use the commitment approach to monitor its global exposure. This
approach measures the global exposure related to positions on financial derivative instruments
which may not exceed the total net asset value of the portfolio of the Sub-Fund.
Additional Investment
Restrictions
In addition to the Investment Restrictions set out in Section 3 of the General Section, the Fair
Oaks Fund will not invest more than 10% of its assets in UCIs or UCITS.
Investment Manager The Management Company has entered into an investment management agreement (the
Investment Management Agreement) with Fair Oaks Capital Limited, a limited liability
company incorporated under the laws of England and Wales, with its registered office at 67-
68 Jermyn Street, London SW1Y 6NY, United Kingdom. Fair Oaks Capital Limited is an
investment management company authorised and regulated by the United Kingdom Financial
Conduct Authority (FCA FRN: 604090). The Investment Management Agreement is governed
by Luxembourg law and is entered into for an unlimited period of time.
Fair Oaks Capital Limited has been appointed as Investment Manager with full discretion,
subject to the overall review and control of the Management Company, to manage and invest
the assets of the Sub-fund in accordance with the Investment Objectives, Investment Policy
and Investment Restrictions set out in this Prospectus.
The Investment Management Agreement may be terminated by either party upon three
months' written notice. It may be terminated without notice in certain circumstances as set out
in the Investment Management Agreement.
Launch Date 13th September 2016 or such earlier or later date as decided by the Board. Investors will be
notified of any decision to postpone the Launch Date and of the new Launch Date.
Term Infinite.
Initial Offering Period The Initial Offering Period of the Fair Oaks Fund starts on the 5th September 2016 until and
including 12th September 2016. The Board may, at its discretion, shorten the Initial Offering
Period or extend the Initial Offering Period for a period of a maximum of two months. In
either this case, investors will be notified of any such decision and of the end date of the Initial
Offering Period. Subscription requests during the Initial Offering Period must be sent in
writing to the Administrative Agent and be received by the Administrative Agent during the
Initial Offering Period and up to the last day by 3.00 p.m. (Luxembourg time). The Initial
Subscription Price per Share will be EUR 1,000 or equivalent in any other Reference Currency
of any Class. The Initial Subscription Price must be paid on or before the Launch Date.
Investors for which the Subscription Documents have been accepted during the Initial
Offering Period will be required to deliver to the account of the Custodian cleared funds for
the full amount of their subscription pursuant to their Subscription Documents on the Launch
144
Date. If the Custodian does not receive the funds in time the purchase order may be cancelled
and the funds returned to the Investor without interest.
Subscribers will be liable for the costs of late or non-payment in which case the Management
Company will have the power to redeem all or part of the Investor's holding of Shares in the
Fair Oaks Fund (if any) in order to meet such costs (including redemption, subscription and
trading costs if any). In circumstances where the Management Company at its absolute
discretion regards it not practical or feasible to recoup a loss from an applicant for Shares, any
losses incurred by the Fair Oaks Fund due to late or non-payment of the subscription proceeds
in respect of subscription applications received will be borne by the Fair Oaks Fund.
Business Day Means each Luxembourg and London Banking Day being a day on which banks are generally
open for business in London and Luxembourg (excluding Saturdays and Sundays and public
holidays).
Transaction Day Every Wednesday. Should a Wednesday not be Business Day, the following day which is a
Business Day. The Net Asset Value per Share will be determined each Business Day, for the
purpose of the Sub-fund’s daily pricing and performance monitoring, notwithstanding there
being a weekly Transaction Day.
Subscription Process Subscription requests for Shares of the Fair Oaks Fund can be made to the Administrative
Agent on any day that is a Transaction Day commencing on the Launch Date, or the Class
Launch Date if later.
Subscription requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Subscription Cut-Off Time) two
Business Days before the relevant Transaction Day at the latest. Subscription requests (i) from
Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may also
be submitted by swift or fax. Any applications for subscriptions received after the Subscription
Cut-Off Time will be valid for the following Transaction Day.
Subscriptions may be made only by investors who are not Restricted Persons by delivering to
the account of the Custodian cleared funds for the full amount of the subscription price (plus
any Subscription Fee if applicable) of the Shares being subscribed for pursuant to the
subscription request, (i) with respect to subscriptions from Institutional Investors, within 3
Business Days following the relevant Transaction Day, (ii) with respect to subscriptions
through Distributor(s), sub-distributor(s) or a nominee, within 3 Business Days following the
relevant Transaction Day and (iii) with respect to subscriptions directly to the Company
without going through Distributor(s), sub-distributor(s) or a nominee from investors other
than Institutional Investors, on the relevant Transaction Day prior to the relevant Subscription
Cut-Off Time.
Redemption Process Redemption requests for Shares in part or in whole can be made to the Administrative Agent
on any day that is a Transaction Day.
Redemption requests must be sent in writing by mail and must be received by the
Administrative Agent by 3:00 p.m. (Luxembourg time) (the Redemption Cut-Off Time) five
Business Days before the relevant Transaction Day at the latest. Redemption requests (i) from
Institutional Investors or (ii) through Distributor(s), sub-distributor(s) or nominees may also
145
be submitted by swift or fax. Any applications for redemptions received after the Redemption
Cut-Off Time will be valid for the following Transaction Day.
Payment of the redemption proceeds shall be made generally 3 Business Days following the
relevant Transaction Day.
EU Savings Directive
In scope
Distributor Initially the Company and the Management Company will appoint Fair Oaks Capital Limited
as Distributor for the Shares of the Fair Oaks Fund. The Distributor may appoint one or more
reputable sub-distributors at its discretion.
Profile of the Typical
Investor
The Fair Oaks Fund is considered a complex product. Investors in the Fair Oaks Fund are
expected to:
understand and be able to evaluate the strategy, characteristics and risks of the Sub-
fund, specifically the risks linked to investments in securitised assets such as
collateralised loan obligations, in order to make an informed investment decision;
and
have the knowledge of, and the investment experience in, financial products which
use derivatives and/or derivative strategies (such as the Sub-fund) and financial
markets generally.
146
Classes of Shares Class A - EUR
Shares
Class A - USD
Shares
Class A - GBP
Shares
Class A - CHF
Shares
Class A - JPY
Shares
ISIN Codes LU1344614893
LU1344615197
LU1344615270
LU1344615353
LU1344615437
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 1.25 %
p.a. of the Net
Asset Value
Up to 1.25 %
p.a. of the Net
Asset Value
Up to 1.25 %
p.a. of the Net
Asset Value
Up to 1.25 %
p.a. of the Net
Asset Value
Up to 1.25 %
p.a. of the Net
Asset Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
147
Classes of Shares Class B - EUR
Shares
Class B - USD
Shares
Class B - GBP
Shares
Class B - CHF
Shares
Class B - JPY
Shares
ISIN Codes LU1344616245
LU1344617136
LU1344618456
LU1344619694
LU1344619777
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 125,000 USD 125,000 GBP 100,000 CHF 125,000 JPY 15,000,000
Minimum
Subsequent
Subscription
Amount
EUR 5,000 USD 5,000 GBP 5,000 CHF 5,000 JPY 500,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional and
Well-Informed
Investors
Investment
Management Fee
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee 10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
148
Subscription Tax
(Taxe
d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
149
Classes of Shares Class C6 -
EUR Shares
Class C6 - USD
Shares
Class C6 - GBP
Shares
ISIN Codes LU1344619850
LU1344619934
LU1344624009
Reference Currency
of the Share Class
EUR USD GBP
Minimum
Subscription
Amount
EUR 125,000 USD 125,000 GBP 100,000
Minimum
Subsequent
Subscription
Amount
EUR 5,000 USD 5,000 GBP 5,000
Subscription Fee Nil Nil Nil
Redemption Fee Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional and
Well-Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional and
Well-Informed
Investors
Investment
Management Fee
Nil Nil Nil
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
150
Subscription Tax
(Taxe d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D - JPY
Shares
ISIN Codes LU1344620270
LU1344620353
LU1344620866
LU1344621245
LU1344621591
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 125,000
USD 125,000 GBP 100,000 CHF 125,000 JPY 15,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Redemption Fee Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional
and Well-
Informed
Investors
Institutional and
Well-Informed
Investors
Investment
Management Fee
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.5% p.a.
of the Net Asset
Value
Up to 1.50% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
151
Classes of Shares Class D - EUR
Shares
Class D - USD
Shares
Class D - GBP
Shares
Class D - CHF
Shares
Class D - JPY
Shares
ISIN Codes LU1344620270
LU1344620353
LU1344620866
LU1344621245
LU1344621591
Performance Fee 10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
10% of the Net
Profit above the
High Water
Mark
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
Classes of Shares Class E3 - EUR
Shares
Class E3 - USD
Shares
Class E3 - GBP
Shares
Class E3 - CHF
Shares
Class E3 - JPY
Shares
ISIN Codes LU1344621674
LU1344621757
LU1344621831
LU1344621914
LU1344622136
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR 1,000,000 USD 1,000,000 GBP 500,000 CHF 1,000,000 JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
152
Classes of Shares Class E3 - EUR
Shares
Class E3 - USD
Shares
Class E3 - GBP
Shares
Class E3 - CHF
Shares
Class E3 - JPY
Shares
ISIN Codes LU1344621674
LU1344621757
LU1344621831
LU1344621914
LU1344622136
Investment
Management Fee
0.50% p.a. of
the Net Asset
Value
0.50% p.a. of
the Net Asset
Value
0.50% p.a. of
the Net Asset
Value
0.50% p.a. of
the Net Asset
Value
0.50% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Nil Nil Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
153
Classes of Shares Class L - EUR
Shares
Class L - USD
Shares
Class L - GBP
Shares
Class L - CHF
Shares
Class L – JPY
Shares
ISIN Codes LU1344622219
LU1344622300
LU1344622482
LU1344622649
LU1344623027
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription Amount
Up to EUR
50,000,000
Up to USD
50,000,000
Up to GBP
50,000,000
Up to CHF
50,000,000
Up to JPY
5,000,000,000
Minimum Subsequent
Subscription Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee
Up to 1.00%
p.a. of the Net
Asset Value
Up to 1.00%
p.a. of the Net
Asset Value
Up to 1.00%
p.a. of the Net
Asset Value
Up to 1.00%
p.a. of the Net
Asset Value
Up to 1.00% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 10% of
the Net Profit
above the High
Water Mark
Up to 10% of
the Net Profit
above the High
Water Mark
Up to 10% of
the Net Profit
above the High
Water Mark
Up to 10% of
the Net Profit
above the High
Water Mark
Up to 10% of the
Net Profit above
the High Water
Mark
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
154
Classes of Shares Class M4 -
EUR Shares
Class M 4 -
USD Shares
Class M4 -
GBP Shares
Class M4 -
CHF Shares
Class M4 - JPY
Shares
ISIN Codes LU1344623373
LU1344623530
LU1344623613
LU1344623704
LU1344623886
Reference Currency
of the Share Class
EUR USD GBP CHF JPY
Minimum
Subscription
Amount
EUR
10,000,000
USD
10,000,000
GBP
10,000,000
CHF
10,000,000
JPY
100,000,000
Minimum
Subsequent
Subscription
Amount
EUR 10,000 USD 10,000 GBP 5,000 CHF 10,000 JPY 1,000,000
Subscription Fee Nil Nil Nil Nil Nil
Redemption Fee Nil Nil Nil Nil Nil
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Institutional
Investors
Investment
Management Fee1
0.25% p.a. of
the Net Asset
Value
0.25% p.a. of
the Net Asset
Value
0.25% p.a. of
the Net Asset
Value
0.25% p.a. of
the Net Asset
Value
0.25% p.a. of the
Net Asset Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Nil Nil Nil Nil Nil
Distribution Policy Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Accumulation
Class
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the Net
Asset Value
Initial Subscription
Price
EUR 1,000 USD 1,000 GBP 1,000 CHF 1,000 JPY 100,000
155
Classes of Shares Class N5
Shares
Class O5
Shares
Class P5
Shares
Class Q5
Shares
Class R5 Shares
ISIN Codes LU****** LU****** LU****** LU****** LU******
Reference Currency
of the Share Class
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum
Subscription Amount
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Minimum Subsequent
Subscription Amount
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Subscription Fee Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Redemption Fee Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Up to 3% of the
Net Asset Value
Dilution Levy Up to 2% Up to 2% Up to 2% Up to 2% Up to 2%
Eligible Investors To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Investment
Management Fee
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Up to 3.0% p.a.
of the Net Asset
Value
Management
Company Fee
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
Performance Fee Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of
the Net Profit
above the High
Water Mark
Up to 20% of the
Net Profit above
the High Water
Mark
Servicing Fee2 Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08%
p.a. of the Net
Asset Value
Up to 0.08% p.a.
of the Net Asset
Value
156
Classes of Shares Class N5
Shares
Class O5
Shares
Class P5
Shares
Class Q5
Shares
Class R5 Shares
ISIN Codes LU****** LU****** LU****** LU****** LU******
Distribution Policy To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Subscription Tax
(Taxe d'Abonnement)
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.01% of the
Net Asset Value
0.05% of the Net
Asset Value
Initial Subscription
Price
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be
determined on
the Class
Launch Date
To be determined
on the Class
Launch Date
Important Footnotes to the Share Class Tables:
1 The Investment Management Fee payable monthly with respect to the Class M Shares will, at the discretion of the
Directors, be reduced from time to time by such amount as necessary to target an ongoing charge per annum, as
specified in the KIID for Class M Shares, of not greater than 0.40% of the Net Asset Value for shareholders of Class
M Shares, provided that the Investment Management Fee may never be reduced below zero. For this purpose the
ongoing charge will also include all investment management, management company, servicing, administration and
custodial fees and expenses and the annual subscription tax. The ongoing charge will not include portfolio
transaction costs.
2 Servicing Fee subject to a minimum of up to EUR 7,500 per month (subject to annual indexation to Luxembourg
inflation) at the level of the Sub-fund.
3 Class E Shares are available to early investors investing from the day after the launch date. The Board will inform
investors of the date on which Class E Shares will be closed for subscription.
4 Class M shares can only be subscribed on launch date or shortly thereafter. The Board will inform investors of the
date on which Class M Shares will be closed for subscription.
5 Class N, Class O, Class P, Class Q and Class R Shares will be available to authorised Investors following Board of
Directors resolution.
6 Class C shares are reserved to the Investment Manager, the Directors and to the staff of the Investment Manager
and its affiliates or to any other investors at the discretion of the Board of Directors.
157
Reference Currency and
Hedging
The Reference Currency of the Fair Oaks Fund is the EUR.
In relation to Classes that are denominated in a currency other than the Reference Currency
of the Sub-fund, the Management Company and the Investment Manager may employ
techniques and instruments intended to provide protection (full or partial, as the case may be)
so far as possible against movements of the currency in which the relevant Class is
denominated against movements in the Reference Currency of the Fair Oaks Fund. All costs
and gains/losses of such hedging transactions are borne separately by the respective Classes.
These Classes will not be leveraged as a result of such currency exposure. Although the
Management Company and/or the Investment Manager intends to utilise such currency
hedging transactions in respect of the Classes of the Fair Oaks Fund that are not denominated
in the Reference Currency of the Fair Oaks Fund, it shall not be obliged to do so.
Likewise, in relation to investments that are denominated in a currency other than the
Reference Currency of the Sub-Fund, the Management Company and the Investment
Manager may decide (but are not obliged) to enter into hedging transactions so as to mitigate
the risk arising out of (adverse) currency exchange rate changes movements.
Investment Management
Fee
The Investment Manager will be entitled to be paid an Investment Management Fee with
respect to each class of Shares of the Sub-fund which shall be calculated and accrued for each
class on each Luxembourg Business Day by applying the relevant Investment Management
Fee rate to the net assets of the Sub-Fund attributable to such class as of the close of the
preceding Luxembourg Business Day, and dividing the sum so computed by the number of
Luxembourg Business Day in the fiscal year. The Investment Management Fee shall be paid
on a monthly basis within seven Business Days after the end of the month. In the case of
Shares redeemed during a month the Investment Management Fee in respect of those Shares
will be calculated and charged on a pro-rata basis.
Performance Fee The Investment Manager will also be entitled to be paid a Performance Fee with respect to
the Sub-fund calculated on a Share-by-Share basis so that each Share is charged a
Performance Fee which equates to that Share’s performance.
For each Calculation Period (as defined below), the Performance Fee in respect of each Class
will be equal to a percentage (as defined above in the Share Class table in “Performance Fee”)
of the difference (only to the extent positive) between 1) any appreciation in the Net Asset
Value per Share (prior to reduction of any accrued Performance Fee) of such Class during
that Calculation Period above the High Water Mark (as defined below) of that Class, as
measured at the end of the Calculation Period (the Net Profit) less 2) the performance of the
Hurdle Rate (as defined below) during that Calculation Period. The Performance Fee in
respect of each Calculation Period will be calculated by reference to the Net Asset Value
before deduction for any accrued Performance Fee.
The Performance Fee is normally payable to the Investment Manager in arrears at the end of
each Calculation Period within seven Business Days after the end of such Calculation Period.
However, in the case of Shares redeemed during a Calculation Period, the Performance Fee
in respect of those Shares will be calculated as if the date of redemption of such Shares were
the end of the Calculation Period and will become payable immediately after the relevant
Transaction Day.
158
If the Fair Oaks Fund is terminated before the end of a Calculation Period, the Performance
Fee in respect of the Calculation Period will be calculated and paid as though the date of
termination were the end of the relevant Calculation Period.
Transfers of Shares will be treated as redemption and subscription for Performance Fee
calculation purposes. Such treatment will result in the crystallization of any Performance Fee
due to holding at such time, in relation to the transferred Shares.
Calculation Period Each quarterly period commencing as of the day following the last day of the preceding
Calculation Period for the Share and ending as of the last Business Day of such calendar
quarter is a Calculation Period.
In case of a launch during a calendar quarter, the initial Calculation Period in respect of any
Class will commence on the Launch Date or the Class Launch Date and end on the last
Business Day of the calendar quarter in which such Launch Date or Class Launch Date
occurs. For such shorter Calculation Periods, the Performance Hurdle Rate as determined at
the first day of the relevant calendar quarter will be adjusted proportionally.
High Water Mark In respect of each Class of Shares the greater of (i) the Net Asset Value per Share of the
relevant Class as of Launch Date or Class Launch Date and (ii) the highest Net Asset Value
per Share of the relevant Class in respect of which a Performance Fee has been paid at the
end of any previous Calculation Period (if any).
Performance Hurdle
Rate
In respect of each Class of Shares the Hurdle Rate used for each Calculation Period in the
calculation of the Performance Fee shall be the greater of (i)the relevant 3 month Interbank
Offered Rate (as determined at the first day of the Calculation Period) in the Currency of the
Class of Shares; and (ii) zero.
For GBP denominated Shares, the Hurdle Rate will be the GBP Interbank Offered Rate with
Bloomberg ticker BP0003M.
For EUR denominated Shares, the Hurdle Rate will be the EUR Interbank Offered Rate with
Bloomberg ticker EUR0003M.
For USD denominated Shares, the Hurdle Rate will be the USD Interbank Offered Rate with
Bloomberg ticker US0003M.
For JPY denominated Shares, the Hurdle Rate will be the JPY Interbank Offered Rate with
Bloomberg ticker JY0003M
For CHF denominated Shares, the Hurdle Rate will be the CHF Interbank Offered Rate with
Bloomberg ticker SF0003M.
Equalisation No Performance Fee Equalisation shall be applied to any class of Shares of the Sub-fund
when a Shareholder subscribes or redeems during a Calculation Period.
159
Incidental costs
The Sub-fund will bear certain costs incurred by the Investment Manager related to the
pricing of the CLOs, as described in section 15 “Operation and administration expenses”.
Specific Risk Factors Investors should carefully review the risk factors set out in Section 19 of the General Section
before investing in the Sub-fund. In addition, Investors should carefully review the following
risk factors that are specific to the Sub-fund:
Historical performance. The Fair Oaks Fund is newly established and has no operating
history. After launch, the past performance of the Fair Oaks Fund – indicated in the key
investor information documents or any marketing material issued for the Fair Oaks Fund or
any other investment vehicle or account managed or advised by the Investment Manager or
any of its Affiliates is not meant to be an indication of its potential future performance. The
nature of, and risk associated with, the Sub-fund may differ substantially from those
investments and strategies undertaken historically by the Investment Manager or its
Affiliates. In addition, market conditions and investment opportunities may not be the same
for the Sub-fund as they had been in the past, and may be less favourable. Therefore, there
can be no assurance that the Sub-fund's assets will perform as well as the past investments
managed or advised by the Investment Manager or its affiliates. It is possible that significant
disruptions in, or historically unprecedented effects on, the financial markets and/or the
businesses in which the Sub-fund invests in may occur, which could diminish any relevance
the historical performance data of the Sub-fund may have to the future performance of the
Sub-fund.
Profit sharing. In addition to receiving an Investment Management Fee, the Investment
Manager is entitled to receive the Performance Fee based on the appreciation in the value of
the Sub-fund's assets and accordingly the Performance Fee will increase with regard to
unrealised appreciation, as well as realised gains. Accordingly, a Performance Fee may be
paid on unrealised gains which may subsequently never be realised. The Performance Fee
may create an incentive for an Investment Manager to propose investments for the Sub-fund
which are riskier than would be the case in the absence of a fee based on the performance of
the Sub-fund.
Business risk. There can be no assurance that the Sub-fund will achieve its investment
objectives in respect of any of the strategies employed. The investment results of the Sub-
fund are reliant upon the success of the strategies implemented by the Investment Manager.
The departure of any of the individuals within the Investment Manager for any reason, or the
failure to appoint qualified or effective successors in the event of such departures, could have
a material adverse effect on the performance of the Sub-fund.
Declining performance with asset growth. Trading large positions may adversely affect prices
and performance. In addition, there can be no assurance that appropriate investment
opportunities will be available to accommodate future increases in assets under management
which may require the Investment Manager to modify its investment decisions for the Sub-
fund because it cannot deploy all the assets in the manner it desires. There can be no assurance
whatsoever as to the effect of an increase in assets under management may have on the Sub-
fund's performance.
Effect of substantial redemptions. Substantial redemption requests made by Shareholders
within a short period of time could require the Sub-fund to liquidate its positions more rapidly
than would otherwise be desirable, possibly having an adverse effect on the value of the Sub-
fund's assets and/or disrupting the Sub-fund’s investment strategy. A reduction in the assets
of the Sub-fund could make it more difficult to generate a positive return or to recoup losses
due to, among other things, reductions in the Sub-fund's ability to take advantage of particular
investment opportunities or decreases in the ratio of its income to its expenses.
160
Credit risk of non-investment grade corporate debt. The Sub-fund may invest in non-
investment grade corporate debt. This debt is considered to be subject to greater risk of loss
of interest and principal than investment grade sovereign or corporate bonds or loans, which
may occur due to adverse changes in the financial condition of the issuer of the debt, a
deterioration in general economic conditions or an unanticipated rise in interest rates.
Credit risk and complexity of Collateralised Loan Obligations (CLO). The Sub-fund will
invest in CLOs, which are securities backed by corporate debt. CLOs are generally issued in
multiple classes, each having different maturities, interest rates and payment schedules, and
with the principal and interest on the underlying assets allocated among the several classes in
various ways. Payment of interest or principal on some classes may be subject to
contingencies or some classes or series may bear some or all of the risk of default on the
assets. The Sub-fund may invest in subordinated classes of CLOs. While protected to some
extent by loss-absorbing junior–ranking capital, the payment of interest and principal to
holders of these classes will nonetheless only be made from the cash flows received on the
CLO’s underlying assets after senior ranking classes and expenses of the CLO have been
paid. As such, the Sub-fund’s investments are particularly susceptible to losses resulting from
defaults within the CLO portfolios. Furthermore, in determining the average maturity or
duration of a CLO, the Investment Manager must apply certain assumptions and projections
about the maturity and prepayment of such security and actual prepayment rates may differ.
If the life of a security is inaccurately predicted, the Sub-fund may not be able to realise the
expected rate of return. In some cases, the complexity of the payment, credit quality and other
terms of such CLO may create a risk that terms of the security are not fully transparent. In
addition, the complexity of CLOs may make valuation of such securities at an appropriate
price more difficult, particularly where the security is customised.
CLO valuation and liquidity. The value of a CLO may be affected by a number of factors,
including: interest rates, changes in the performance or the market’s perception of the
underlying assets backing the security and changes in the market’s perception of the adequacy
of credit support built into the security’s structure to protect against losses. The secondary
market for CLOs may not be as liquid as the secondary market for corporate debt. As a result,
the Investment Manager could find it more difficult to sell these investments or may be able
to sell them only at prices lower than if they were widely traded. It may be difficult to
establish accurate prices for such investments for the purposes of calculating the Sub-fund’s
Net Asset Value. Therefore, prices realised upon the sale of such investments may be lower
than the prices used in calculating the Sub-fund’s Net Asset Value.
Dependence on Managers of CLOs. The performance of the Sub-fund’s investments in CLOs
will depend in part upon the performance and operational effectiveness of the managers of
the CLOs. The Sub-fund will invest in CLOs which are subject to management and
performance fees charged by the managers of the CLOs. These are in addition to the fees
charged to the Sub-fund as described in this Special Section. Payment of such fees could
have a negative impact on the returns achieved by the Sub-fund.
Interest Rate Risk. The Sub-Fund’s fixed-rate investments and, to a lesser degree, floating-
rate investments will be subject to interest rate risk. Interest rate risk refers to the risk of the
market value of a bond or corporate debt changing in value due to changes in the structure or
level of interest rates or credit spreads or risk premiums.
Other trading activities of the Investment Manager and its Affiliates. Conflicts of interest may
arise from the fact that the Investment Manager and its affiliates provide services to clients
other than the Fair Oaks Sub-fund, including, without limitation, investment funds, separately
managed accounts, proprietary accounts and other investment vehicles (collectively, "Other
Accounts" and, together with the Company, the "Accounts" and each, an "Account"). The
Fair Oaks Sub-fund will not have an interest in any Other Accounts.
161
Other Accounts may have investment objectives, programs, strategies and positions that are
similar to or may conflict with those of the Fair Oaks Sub-fund, or may compete with or have
interests adverse to the Fair Oaks Sub-fund. Such conflicts could affect the prices and
availability of financial instruments in which the Fair Oaks Sub-fund invests. Even if an Other
Account has investment objectives, programs or strategies that are similar to those of the Fair
Oaks Sub-fund, the Investment Manager may give advice or take action with respect to the
investments held by, and transactions of, the Other Accounts that may differ from the advice
given or the timing or nature of any action taken with respect to the investments held by, and
transactions of, the Fair Oaks Sub-fund due to a variety of reasons, including, without
limitation, differences between the investment strategy, financing terms, regulatory treatment
and tax treatment of the Other Accounts and the Fair Oaks Sub-fund. As a result, the Fair
Oaks Sub-fund and an Other Account may have substantially different portfolios and
investment returns. Conflicts of interest may also arise when the Investment Manager makes
decisions on behalf of the Fair Oaks Sub-fund with respect to matters where the interests of
the Investment Manager or one or more Other Accounts differs from the interests of the Fair
Oaks Sub-fund. The Investment Manager pays due regard to the interests of its clients,
including the Sub-fund, and aims to treat them fairly at all times. The Investment Manager
has implemented systems and controls to identify and manage conflicts of interest. The
Investment Manager aims to manage conflicts of interest fairly, both between itself and its
clients and, should the need arise, between two or more clients.
Lack of Exclusivity. The Investment Manager, its affiliates and personnel will devote as much
of their time to the activities of the Fair Oaks Sub-fund as they deem necessary and
appropriate. The Investment Manager, its affiliates and personnel will not be restricted from
forming additional investment funds or vehicles, from entering into other investment advisory
relationships or from engaging in other business activities, even if such activities may be in
competition with the Fair Oaks Sub-fund and/or may involve substantial time and resources
of the Investment Manager, its affiliates or personnel. These activities could be viewed as
creating a conflict of interest in that the time and effort of the Investment Manager, its
affiliates and personnel will not be devoted exclusively to the business of the Fair Oaks Sub-
fund but will be allocated between the business of the Fair Oaks Sub-fund and the
management of Other Accounts and businesses.
From time to time, senior management and key employees of the Investment Manager may
serve as directors, advisory board members or consultants of certain portfolio companies or
other entities. In connection with such services, such persons may receive directors' fees or
other similar compensation attributable to such employees' services.
Allocations of Trades and Investment Opportunities. It is the policy of the Investment
Manager to allocate investment opportunities to the Fair Oaks Sub-fund and to any Other
Accounts fairly, to the extent practical and in accordance with the Fair Oaks Sub-fund’s or
Other Accounts' applicable investment strategies, over a period of time. Investment
opportunities will generally be allocated among those Accounts for which participation in the
respective opportunity is considered appropriate, taking into account, among other
considerations: (i) available cash of the Accounts for the proposed investment; (ii) the
primary investment strategy of the Accounts; (iii) the liquidity profiles of the Accounts; (iv)
the primary markets invested in by the Accounts; (v) the potential for the proposed investment
to create an imbalance in an Account's portfolio; (vi) the amount of assets held by the
Accounts; (vii) whether the risk-return profile of the proposed investment is consistent with
an Account's objectives; and (viii) regulatory restrictions or other eligibility criteria that
would or could limit an Account's ability to participate in a proposed investment.
The Investment Manager will have no obligation to purchase or sell a security for, enter into
a transaction on behalf of, or provide an investment opportunity to the Fair Oaks Sub-fund or
Other Accounts solely because the Investment Manager purchases or sells the same security
for, enters into a transaction on behalf of, or provides an opportunity to an Other Account or
the Fair Oaks Sub-fund if, in its reasonable opinion, such security, transaction or investment
opportunity does not appear to be suitable, practicable or desirable for the Fair Oaks Sub-
fund or the Other Account.
162
Order Aggregation and Average Pricing. If the Investment Manager determines that the
purchase or sale of a security is appropriate with regard to the Fair Oaks Sub-fund and any
Other Accounts, the Investment Manager may, but is not obligated to, purchase or sell such a
security on behalf of such Accounts with an aggregated order, for the purpose of reducing
transaction costs, to the extent permitted by applicable law. When an aggregated order is filled
through multiple trades at different prices on the same day, each participating Account will
receive the average price, with transaction costs generally allocated pro rata based on the size
of each Account's participation in the order (or allocation in the event of a partial fill) as
determined by the Investment Manager. In the event of a partial fill, allocations may be
modified on a basis that the Investment Manager deems to be appropriate, including, for
example, in order to avoid odd lots or de minimis allocations. When orders are not aggregated,
trades generally will be processed in the order that they are placed with the broker or
counterparty selected by the Investment Manager. As a result, certain trades in the same
security for one
Account (including an Account in which the Investment Manager and its personnel may have
a direct or indirect interest) may receive more or less favourable prices or terms than another
Account, and orders placed later may not be filled entirely or at all, based upon the prevailing
market prices at the time of the order or trade. In addition, some opportunities for economies
of scale and reduced transaction costs may not be achieved. The Investment Manager will
comply with all applicable obligations to act in the best interests of the Fair Oaks Sub-fund
and to seek best execution under the applicable laws in effecting transactions on behalf of the
Fair Oaks Sub-fund.
